Effect on British Business for Joining Euro Zone Essay

Effect on British Business for Joining Euro Zone - Essay Example Labour Productivity: The output per worker is the ratio of total output and total employment and the unit labour cost is total labour costs-to-output. The output per worker has remained unchanged in the last two quarters but unit labour costs have increased by 0.3% in the last two quarters (ONS, 2011, p.8). Labour Disputes: These are associated with the strikes with respect to the terms and conditions related to employment. During the last 12 months before October 2011, there were 417,000 lost working days from 135 strikes (ONS, 2011, p.9). Unemployment: This measures the unemployed people who are actively seeking work and ready to join work immediately. The unemployment rate was up 40 basis points from previous year leading to 8.3% unemployment rate. The unemployed youth formed 22% of economically active population. As per the international guidelines, people in full-time education are unemployed if they are looking for jobs since last four weeks (ONS, 2011, p.11). It can be seen th at the public sector cutting of jobs has worsened the employment situation in Britain. The Conservative Party seeks to bring down the deficit to maintain the record low interest rates and avoid situations faced by Greece, Spain and Portugal (Politics.co.uk, 2011). Some people view the reasons for unemployment especially youth unemployment is because of too much reliance on unemployment benefits provided by the government and unwillingness to accept the jobs offered whereas the corporate sector believes the burden of red tape, taxes and minimum wages have tied up their businesses and prevented them from hiring more people (Palmer, 2011). Measures for Reducing the Unemployment There are three types of... Based on this research, the British economy has been affected at first due to joining the Euro Zone as the government has to cop up with the new policies of the regulatory body which make the laws for the Euro Zone. The British government has to incur certain costs for adopting with the new policies, for educate the people so that they can cop up with the new currency and new policies. Though the government had to face some initial costs but the economy are benefited from a long term view. The businessman of UK would get the new opportunity for enhance their business in the other Euro Zone countries. As the currency of 17 countries is same the transaction cost of the business has got lower. The interest rates of the country’s central banks getting lower, the mortgage also get down. Along with this the credibility of the Euro currency is improving as the same currency is used by 17 countries. The currency is not fluctuating as the previous so the investor doesn’t have to hedge their investment. The opportunity for the business owners is that they have access for a larger base of customers as well as they can utilize the larger workforce available to them. The British small and medium companies will have the opportunity to get the foreign funds as the transaction costs are not as high in the Euro Zone as there is the same currency operating in every country. The UK business owners can also have the ideas and the technologies which can enhance the revenue and subsequently profit of the company and thus the gross domestic product of the country can be improved.