The Economy and it's Effect on Politics Essay Example | Topics and Well Written Essays - 500 words

The Economy and its Effect on Politics - Essay ExampleThe existence of the EU is the leave alone of desire to create a European common market, where trade barriers are removed and hence promote economic activities between political member states whilst neat a united political entity on the world stage.Five economic tests were set out to determine whether the UKs economy was ready for such a change, 1) converging with the Euro zone 2) Flexibility to adapt 3) Impact on jobs and economic growth 4) Impact on the financial services sector and 5) Impact on investiture (BBC, 2003). Two of these tests will be discussed in this essay. The Bank of England currently sets the interest rate for the UK but convergence means that power will be transferred to the European Central Bank (ECB). The UKs economy would have to be in sync with the rest of the Euro zone to avoid stresses on the domestic economy, for example The UKs mortgages are contrasted the majority of Euro mortgages as they are in general variable rate mortgages, the UK has the highest property owner occupation than any other European country so is sensitive to interest rate changes. There are political and economic consequences to this sensitivity for example mortgage borrowers show unenthusiastic attitude to their political peers concerning fall in the Euro zone precisely because of this and convergence would bear consequence on the economy as there would be a reduced spending power of these borrowers. joining a single