Should Ulster join the euro?

Ulster says yes - to the euro. Northern Ireland is the only region in the UK where a majority of medium-sized businesses want to join the euro.
There's a simple reason for this. Northern Ireland's proximity to the Republic means it does a lot of cross-border trade, and so the costs of being out of the euro - transactions costs and exchange rate volatility - loom larger. These figures suggest Northern Ireland's exports to the EU account for a higher proportion of its GDP than the UK average - despite the fact that the market sector accounts for a smaller-than-average share of Northern Irish GDP.
Which raises an interesting possibility.  Could it be that it's in Northern Ireland's interest to join the euro, even though it's not in the UK's general interest?
Certainly, this is a theoretical possibility; there's little reason to suppose that optimum currency areas must  always be co-terminous with national boundaries. Indeed, other evidence suggests that even developed countries  are not single economic units, in the sense of having greater capital mobility within the country than across it's borders.
Which raises a more general question. Could it be that economists focus upon national economies not because countries are natural economic units, but simply because that's where the data are? Hence the worry about national current account deficits but not about regional ones.

Comments

[dearieme]

Why not have competitive currencies? Let people write contracts in whatever currency they agree to. If that meant we all used Swiss Francs, so be it.

[Umbongo]

dearieme

You can already write contracts in any currency you like and the contracts will be enforced in the English courts. What you can't do is go into a shop (or a bus) in London and insist on paying in euros or dollars.

In theory I'm all in favour of competing currencies being legal tender but I'm damned if I can work out the practicalities of such a system. My local newsagent would go ballistic if I offered him some baht for a packet of ciggies.

[Laurent GUERBY]

Umbongo, if you have an international credit card you can already choose to pay using whatever currency you want (the one of your account).

Of course banking conglomerate are private entities, so it's a perfect world full of competition and you pay the marginal cost of the transaction.

Ooops?

[dearieme]

Thanks for the enlightenment, chaps.