The three outsiders and the monetary union
EMU at ten. Should Denmark, Sweden and the UK join? SNS Förlag. Chapter 6 in the report by SNS Economic Policy Group, consisting of Flam, Harry (chairman), Fatas, Antonio, Holden, Steinar, Jappeli, Tullio, Mihov, Ilian, Pagano, Marco and Wyplosz, Charles.
Before the start of monetary union in 1999, Denmark, Sweden and the UK decided that they
did not want to participate. Denmark and the UK obtained opt-out clauses in the Maastricht
Treaty, while Sweden has chosen to stay out unilaterally. In all three countries, the key reason
for this decision was - and still is - a negative view among the electorate. The Danish and
Swedish governments have been in favour of membership and have put the issue before the
people in a referendum (in Denmark twice). In the UK, the government has been in favour in
principle, but with caveats.
This chapter reviews the costs and benefits of being outside the monetary union for Denmark,
Sweden and the UK in view of the evidence from the last ten years. Building on the
discussion in the preceding chapters, we consider the effects in relation to monetary policy,
fiscal policy, labour markets, trade, and financial markets. We also briefly discuss political
issues - whether the outsiders have experienced reduced influence in the EU and whether the
entry of new member states into the monetary union has had any significance for the three
outsiders. We start, however, by reviewing the background for why Denmark, Sweden and the
UK are not currently members of the monetary union.