UK - Schemes will have a long wait before they receive any possible benefits from UK membership of the euro, economists warn.
Consultants are confident that joining the European Monetary Union would be good for pension schemes, which would be able to cut their portfolio risk levels by accessing a wider range of investment opportunities. This would diversify their portfolios and give them a greater chance of producing positive returns.
But economists believe the UK is unlikely to join the euro before 2010.Watson Wyatt and PricewaterhouseCoopers both say that joining the EMU would help bond investors as they could access the market – which is three times the size of the UK market and has higher yields – without having to use currency hedging.
But the chances of the UK joining the EMU before 2010 remains slim, research from Reuters suggests.
In a survey of 35 economists it found the chances of the UK joining Europe’s monetary union before 2010 are low and slipping, as the government comes under pressure from voters to shift its focus to public services. It found the chances of the UK joining the EMU by end of 2006 have fallen to 13% from 25% in April.
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