Should the UK Join Emu?

Abstract

This article considers the economic case for UK membership of EMU. Traditional optimum currency area (OCA) analysis provides only a weak case for membership: the UK is located among the periphery and not in the core. Considerations of the possible costs of isolation (the risks of trade discrimination and the dangers of a volatile currency) together with some pertinent qualifications of OCA analysis (the possible endogeneity of the OCA criteria) serve to strengthen the case for joining. Whilst it is not overwhelming, the final verdict is positive.