by Katerina Nikolas

Created on: December 20, 2011   Last Updated: December 22, 2011

As the European single currency shifts ever deeper into crisis, mired by sovereign nation debts, increasingly desperate measures are enacted to save the euro. Eurocrats make demands on individual nations, imposing their will in a way that undermines democratic principles. Although the U.K. retained the pound and rejected joining the euro, it is not immune to the eurozone crisis, nor is it free of demands to help prop up the single currency.

The euro appears an increasingly flawed project, with many analysts predicting inevitable failure. The notion of borrowing ones way out of debt and repaying the interest levied through increased taxes and austerity measures is intrinsically destructive. Britain is expected to contribute to the bail out of the euro, yet as of December 2011 is refusing to pour further cash into what could be considered a suicidal currency. By using its veto at the Dec. 9 summit Britain is increasingly isolated from decisions regarding the euro, although the summit achieved little to reverse the decline of the euro fortunes.

If the euro does fail then Britain stands exposed due to the level of euro debt it holds through lending, though major banks are reducing their exposure. Its AAA credit rating is at risk which would increase its own costs of future borrowing, leading to increased austerity measures in the U.K. Trading within what would become the former eurozone would be fraught with difficulties as individual nations experience an internal devaluation of any new currency.

The failure of the euro would expose the whole world to an inevitable banking crisis and deep recession. Britain may well consider other trade partners more viable than its European partners if their currencies become uncompetitive. This could well fuel the argument that Britain must hold a referendum on its possible exit from the European Union. As more laws have been issued from Europe, overriding national laws, people have become increasingly negative about the benefits to the U.K. of remaining within the EU, at a cost of £46 million per day.

European laws control national immigration policies, environmental policies, and increasingly seek to control national budgets. If the current scenario continues of handing over ever greater powers to faceless unelected Eurocrats then British patience will run out as European laws impose yet greater expense on an already debt-ridden Britain.

The failure of the euro will cost the U.K. a high price in defaulted debts, exposure to the euro fallout and the impact of its failure on the world economy. However the long term benefit of no longer being on the periphery of an increasingly doomed single currency, could well outlast the price of continual demands on the U.K. to prop it up.

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