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For example, at the moment you can get US$1.80 for £1, but this
rate was as high as $2 for £1 earlier this year, and has been as
low as $1 to £1 in the past.
Think about
this for a while... imagine going to America on holiday.
If a hotel
room costs $50 a night, depending on exchange rates, the room could cost
as little as £25 - or as much as £50 (that’s quite a
difference)!
It is the
same with the euro...
If you are
doing business with a country which uses the euro, you won’t know
exactly how much money you will pay for something (or receive) because
the exchange rate between the pound and the euro is constantly changing.
So, one day the products you are selling might be very good value in euro,
but the next day they could suddenly become expensive. This makes it very
difficult for businesses to plan for the future.
The banks
have advanced financial tools that can guarantee businesses a set exchange
rate - but, of course, they charge for this!
There is
also the cost of exchanging money... The banks sell foreign currency at
a higher price and buy at a lower price. Have a look next time you walk
past a bureau de change!
So, by having
the euro in Britain, there will be no cost or uncertainty of exchanging
money... it will also mean that you won’t need to change your pocket
money into euro when you go on holiday to Spain or other countries in
Europe with the euro - and you will not have annoying little coins leftover
either!
So,
what will happen...???
Well, the
government has said that our economy has to be ready, and that we (the
people) will decide when, and whether, we join the euro...
Whatever
happens it will have big effects on all our lives!
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