Special report: Five economic tests

In a series of special reports the World at One takes a snapshot of the British economy and examines the government's economic preconditions for joining the Euro.

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Click here for full explanations of the tests

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When Tony Blair came to power in May 1997, most European Union members were well advanced in their planning for Economic and Monetary Union (EMU), and a brand-new currency, the euro.

Click here for the full interviews from the five 'wise men'

Charles Goodhart

Kenneth Clarke

Sir Peter Kemp

David Lascelles

John Edmonds

It was widely assumed in Europe that the incoming Labour administration - which was, and is, in favour of joining the Euro "in principle" - would soon commence negotiations.

But in this Mr Blair - and even more so the Chancellor Gordon Brown - adopted a cautious approach confirming that Britain under Blair would not join in the first wave.

Labour had to find a way to ensure its divisions over the single currency did not blight it as they had the previous administration.

So on October 27 1997, Gordon Brown stood up in the Commons to unveil his five economic conditions - soon it became a mantra for ministers, to serve them as long as it was needed.

'Triple lock'

The chancellor's tests were pinned to the so-called "triple lock": the consent of the cabinet, Parliament and the people in a referendum.

Gordon Brown's five economic tests

Can there be sustainable convergence between Britain and the euro zone?

Is there sufficient flexibility to cope with economic change?

What will the effect be on UK investment?

What will be the impact on our financial services?

Is it good for employment?

His enemies soon concluded that the five conditions were nothing more than a blind, which would allow ministers to put off joining the euro until they were satisfied that they could get away with it, politically.

As Europe marks two years since the launch of the currency - which has spent much of the past twelve months in a sickly state - Britain continues to prepare to join without having decided to do so.

But what are these tests? Have they been met? Could they be met soon? And what do economic experts think of them?

With the help of 'five wise men' the World at One assesses the five tests.

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Test one: Convergence

Are business cycles and economic structures in the UK economy compatible with those of its European partners?

Can everyone in EMU live comfortably with euro interest rates on a permanent basis?

Analysis: test one

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Test two: Flexibility

Nobody wants euro membership at the expense of a major disruption to the UK economy.

If problems emerge is there sufficient flexibility in the Eurozone economies to deal with them?

Analysis: test two

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Test three: Investment

Would entry encourage inward investment into Britain?

Analysis: test three

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Test four: UK financial services industry

Would the UK's financial services industry - in particular City firms - be able to maintain their competitive edge?

Analysis: test four

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Test five: The effect on UK employment

Will joining EMU promote higher growth, stability and a lasting increase in jobs?

Analysis: test five