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Monday, 12 February, 2001, 07:57 GMT
EU says UK 'ready for euro'
The UK could hold a vote on the euro within two years
European Union finance ministers are expected to tell the Chancellor Gordon Brown the British economy now fulfils the conditions necessary for membership of the single currency.

At the Ecofin talks in Brussels, the ministers will consider the UK Government's proposals for bringing the British economy into line with the countries of the euro zone.

Last week Tony Blair said he would make a decision on the timing of a referendum on British membership of the euro within two years of an election victory.

The government has always said it would not attempt to bring the UK into the single currency until economic conditions were right.

Spending plans

During the meeting the EU finance ministers will examine a document which shows that Britain meets the Maastricht treaty conditions for joining the euro.

Gordon Brown
Gordon Brown will criticise an EC judgement
The British economy is now relatively in step with Europe on interest rates, inflation and economic growth.

If the UK does join the euro, the government will have to keep spending under control in order to comply with the EU's rules.

But this could run contrary to Mr Brown's public spending plans for the next three years which are based on borrowing.

On Monday the chancellor is expected to criticise a recent European Commission judgement which suggests his plans would break EU financial discipline rules by ending with a budget deficit.

The Times said independent estimates suggested if Britain joined the euro under the current rules, the government would be obliged to tighten financial policy, either by raising income tax by 2p or cutting investment by 12bn.

'Intelligent' interpretation

Mr Brown is expected to call on the commission to adopt a more "intelligent" interpretation of the EU's growth and stability pact, the foundation stone of the single currency, which requires member countries to keep their budgets broadly in balance.

He will argue the case for Labour's "golden rule", which gives the government latitude to borrow to invest in the public services.

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See also:

06 Feb 01 | UK Politics
Redwood backs EU renegotiation
01 Feb 01 | UK Politics
Cook plays down anti-euro poll
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