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LONDON, June 9: Britain on Monday ruled out joining the euro for now, but surprised critics by saying it may take another look at the divisive currency debate next year.
Chancellor of the Exchequer (finance minister) Gordon Brown told parliament Britain would not benefit at the moment from adopting the EU single currency, saying four of the five tests he set in 1997 had not been met.
But in surprisingly enthusiastic comments, he also outlined the government’s vision in principle for signing up at a future date to the currency already adopted by 12 of the 15 EU members.
“Membership in a successful single currency would be a benefit to the British people as well as to Europe,” Brown said.
“It is a decision of far-reaching consequence, indeed — because it is irreversible — one of the most momentous economic decisions our country has to take.”
Brown’s long-awaited verdict means the pound, in place since Anglo-Saxon times, will survive for now while Britain’s soul-searching over Europe continues.
The tests could be re-examined early next year and, if positive then, would lead to a referendum, he added.
“The government’s view is that if the economic case is clear and unambiguous, then the constitutional issue, while a factor in the decision, should not be a bar to entry,” Brown said.
“If on the basis of the five economic tests, membership of the euro is shown as good for sustaining British jobs, British business and British future prosperity, then it is economically right and in the national interest to join.”
Mr Brown and Prime Minister Tony Blair were to give a joint news conference on Tuesday to hammer home that message and quash speculation of differences between them.
Analysts say the euro verdict is a carefully concocted compromise between Mr Brown’s fear of jeopardizing his domestic economic record, and Mr Blair’s belief that Britain’s “destiny” is to adopt the currency and take a place at the heart of Europe.
If it does go to a referendum, the government would face a hard battle convincing a sceptical public.
Polls show two-thirds of Britons want to keep their pound, fearing an erosion of sovereignty without it.
KEY OBSTACLES: Studies released by the British Treasury earlier on Monday highlighted the key obstacles to Britain joining the euro now.
Running to over 1,700 pages, they said Britain’s housing market made it more sensitive to interest rate changes and that progress on labour market flexibility in the European Union lagged the UK and had been slow to pick up.
They also said Britain’s economy remained more in tune with that of the United States than the EU. On the positive side, the studies said there were clear potential benefits in terms of greater trade with the EU, should Britain swap currencies.
British wariness about tying ever closer into the Europe has a long history.
The UK joined the old European Economic Community in 1973, 16 years after the bloc’s founding members, and has had numerous spats since. Most recently, Mr Blair’s enthusiastic support for the invasion of Iraq split Europe down the middle.—Reuters
