Economics/Euro and UK


Why UK is not a member of the Euro currency group ?

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There are many reason in the internet for UK not joining or adopt Euro as their common  currency.  Their main expressed reasons are
1) The five economic test
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2) Political reason
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3) UK Population is against Euro
Source :

All these and many more are peripheral reasons given by UK and their supporters. But I am going to divulge a new dimensional and secret reason for this question.


The world is controlled by two powers. One is Administrative power and other is Economic power.


USA is called the Super power in the world, located in the Western hemisphere (North America). This is with reference to their administrative ability, both during the war and peace time. US is a super power because, it precisely bombarded Hiroshima and Nagasaki in Japan with Atom Bomb, during 1945 and ended the World War 2 (1939 to 1945). Between Germany and Japan in one side and all other nations,  called Allies, in the other side.  

It was just after the invention of Atom Bomb and many believed, including the inventor Albert Einstein, that it is impossible to carry a heavy and critical pay load of Uranium 235, to that height, not traceable by any ground radar and drop pin pointedly. US is a super power supported by R & D in every tangible and intangible aspects of life. It is also an undoubted super power in political, management and scientific area.

UK (United Kingdom or Britain) is another Royal power, located in eastern hemisphere (Europe). This with reference to their ability to capture  every nation in the world, form colonies and establish a “British Empire” in the world. It was so powerful that “Sun never sets in British Empire” (Because all points on the globe was owned by them). The powerful colonies cover the lands of  USA, Arabian nations, Africa, Middle/Far East, Australia, Canada, and all western and eastern developing countries. First empire was in 1783 to 1815 AD, Second in 1815 to 1914.

The impacts of the First World war (1914 to 1918) and Second world war (1939 to 1945), diluted the strength of the Empire. From 1945 to 1997, they awarded independence to the colonies, one by one. But on condition to be  a member of the Common Wealth, with the Queen/King of Britain as ahead.  The local administration of the independent country, will recommend a  Head of the nation, Governor General (GG) to the Queen/King (Ruler) for approval. The selected GG will report to the Ruler. All the rules, regulations and laws of the nation should be approved by the Ruler, and then only they are effective.


Both the world powers, USA and UK, continued to dominate the world, by maintaining their currencies Dollar (USA) and Pound (UK) respectively, with almost on top of exchange value.  Both the currencies are stable and preferred by business, traders and individuals, as an international standard.

But all other the European nations (Like France, Germany, Italy etc..) with the power of their technology, wanted to form a common conglomerate, to uplift the economic value of their currency in the foreign exchange market.  The European Union (EU) was initiated in 1948 as an economic and political union of 28 member states that are located primarily in Europe. The creation of an European single currency became an official objective of the European Economic Community in 1969.

Euro is initiated by 17 of the 28 member states of the European Union : Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. They created Euro (€) as their common currency. The name euro was officially adopted on 16th December 1995. The euro was introduced to world financial markets as an accounting currency on 1 January 1999,

The foreign exchange value of one national currency with reference another nation is decided by their mutual Balance of Payment.  

A) Country C1 has to pay an amount of CX, to country C2. and has to receive an amount CY  from country C2. The difference (CX – CY)  is the balance of payment of C1 to C2.
B) If  (CX – CY)  is +ve, then the currency of C1 is stronger than the currency of C2 (Receivable situation).
C) If  (CX – CY)  is -ve, then the currency of C1 is weaker than the currency of C2 (Payable situation).
D) The payment occurs trough Exports, loans and services  paid.
E) The receipt occurs through Imports, loans taken and services received.

As on December 1, 2013,
1 US Dollar = 0.735509 Euro. One gets less than 1 Euro. So Dollar is weaker (Marginally weaker)
1 British Pound = 1.206109 Euro. One gets more than 1 Euro. So Pound is stronger. (Marginally stronger)
But in general, Pound is always a stronger currency than Dollar.


UK has an unique leverage to keep their Pound stronger on a continual basis. This is due to the legacy  left  by the British Empire. They have a number of territories with full control (even though they do not own) and  use them to manipulate their export, import accounts, so that the balance of payment of UK is in a favourable position.

Source : 
Antarctica : British Atlantic Territory (1)
Caribbean Islands : Anguilla, Bermuda, Montserrat (3)
Iberian Peninsula : Gibraltar (1)
Indian Ocean : British Indian Ocean territory (1)
North America : Bahamas, Barbados, Bermuda, British Honduras, British Leeward Islands, Jamaica, Newfoundland, Nova Scotia (8)
South Atlantic Ocean : South Georgia, South Sandwich Island (2)
Total   16

At the time of decolonization, 16 islands refused to  be  an independent nation.  But UK did not own them also. They are still controlled by Britain as a Commonwealth slaves, through a Governor General appointed by the King/Queen.

In addition, there are 4 nations under the Federal Parliamentary Constitutional Monarchy. The head of these nations, is the King or Queen of Britain. They are Australia, Belgium, Canada, St Kitts and Navis.
(Source :

UK uses their power on these 15 overseas territories and order  to

Channelise about 70% of  the UK  imports through them. So the imports by UK is only 30%.  
The imported materials are brought into UK as domestic transfer.
UK Captures 70% of  the Territory’s exports and channelises them  through UK.
The same technique is used to burden the territories with the overseas loans taken by UK (From World Bank, IMF etc..), and get the amount into UK as domestic transfer

UK performs a similar  operation on the on request to the 4 nations under Federal Parliamentary Constitutional Monarchy system. The result is

UK : (70% is an approximation. It will vary from territory to territory).
Own Export = 100% + Supported export from territories = 70%
Total Exorts = 170%
Own import = 30%. Net balance = 170 – 30 = + 140%
Own Export = 30%          
Own import = 100%. Import for UK  = 70% Total import = 170%
Net balance = 30 – 170 = -140%

As a result, the balance of payment of UK is always low, leading to a strong British Pound in the foreign exchange market. Their territories bear a large unfavourable balance of payments and have a weak currency. A sacrifice in favaour of UK, their master.


If UK joins the Euro group, it has a committed responsibility to keep Euro as a strong currency in the foreign exchange market, particularly, even stronger than the British Pound. This is against the selfish gains of UK and the leverage of the use of territories. So UK refused to join the Euro currency group.

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Basically a B.Sc (Physics) from the University of Madras, India. Started the career in production engineering under German and Italian experts. MBA in Management from IIM, Ahmedabad (India). Ph.D (Management) from the University of Bomaby (the first ever awarded in this subject). Headed the computer centres of Multi nationals; "Data Processing expert" of the Commonwealth, London (To implement World Bank and UNDP Computer softwares); "Consultant Adviser" to the Caribbean Development Bank (CDB), Barbados. Associated with Nobel Laureate in Economic Science-1979, Arthur Lewis (Past President of CDB) & 4 more on his introduction. Visiting professor to many universities. A Trained ISO 9001:2000 Quality Auditor. Over 40 years of combined experience in Accounts, Computer Software, Economics, Engineering, Management, Science, Technology, Research & Development and Qulaity systems. Author of over 60 Application Research papers. Currently a free-lance consultant in ISO Quality Systems, Socio-Economic development acceleration, Innovative software designs. Can answer any question in Theoritical/Applied-economics with an in-depth and innovative dimension. I DO NOT ANSWER : 1. STATISTICAL data & analysis. 2. PRIVATE questions, as they do not appear for PUBLIC view & search 3. Examination & Project report oriented questions. Website


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