This is a fierce debate. The partisans in favor write,

By removing the barriers of separate currencies, the creation of the euro has led to a rapid increase in cross-border trade in the euro-zone. Germany’s trade with the EU has leapt from 27% of national output in 1998 to 32% in 2001. France’s trade with the EU has risen from 28% of GDP to 31%. Overall, the average rise in euro-zone countries is 3 percentage points. Meanwhile, Britain’s trade with Europe has stagnated.

Norman Lamont, an opponent writes,

increased trade in the euro zone has completely failed to translate into extra growth or jobs. The exchange of goods in itself is not the final objective of policy. The OECD for 2003 expects the euro-zone’s unemployment rate to be 8.8% compared with Britain’s 5.4%, and economic growth of 1% compared with Britain’s 2.1%.

I agree with Martin Feldstein that Europe is not an optimum currency area. It is not clear that Britain wants to tie its macroeconomics policies to Europe’s.

As far as trade is concerned, I continue to believe that differences in language are more important than differences in currencies. If I were British, I would offer to join the euro as soon as other European countries agree to adopt English.

For Discussion. Proponents of the euro say that it will lead to “harmonization” among European countries, with fewer institutional differences. Is that a feature or a bug?