rative to the success of the organization that the UK join, as they will be required to counter-balance the inevitable attempts to dominate by France and Germany (Princeton Economics, 1998). The reluctance of the UK to adopt the Euro will undoubtedly have ramifications for the British economy, particularly manifesting itself in the form of intense currency pressure. To avoid exchange rate fluctuations, the UK’s central monetary authority will need to impose a very strong financial policy. These currency fluctuations and tight monetary policy are likely to expose UK firms to greater exchange rate risk and higher borrowing costs respectively (Europa Quest (2), 2001). The maintenance of the pound as a national currency will also limit UK firm’s ability to accrue the efficiency gains through intra-community competition, which their Euroland counterparts will experience, thus they will not be able to compete as successfully in international trade (Princeton economic, 1998). Alternatively, the reluctance of the UK to embrace full economic integration into Europe, may prove to be a highly successful protectionist measure of UK firms, should the Euro not produce the economic gains expected (BBC, 1998). Most other European nations seeking ascension into the EMU, are countries generally perceived to have less developed economies (Europa Quest (1), 2001). Detailed negotiations are currently taking place over the possible membership of Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, Slovenia, Cyprus, Malta and Turkey (IMF, 2000). It is important to note, that prior to the development of the EMU many of these nations pegged their currencies to either the Deustchemark or the Franc, moreover they will now irrevocably fix their exchange rate to the Euro (Europa Quest (3), 2001). This infers any large fluctuations in the Euro, will have dire consequences for these developing economie...
