Euro Test

Will Britain meet the tests for a referendum on the Euro?

UK Chancellor Gordon Brown says whether Britain joins the euro or not is "the biggest peacetime economic decision we as a nation have to make".

To help us decide, the government set five economic tests back in 1997 that are supposed to be met before a referendum is held. The official verdict on the tests is due next spring.

In this edition of Analysis Margaret Doyle finds a sharp divergence of opinion among economists about these tests.

The two tests that matter most are the most disputed. Firstly, how well Britain's economy is converged with that of the Euro zone; and secondly, whether the economy is sufficiently flexible to cope with "shocks" if the UK gave up control of its exchange and interest rates.

She concludes the third test on investment deserves a small tick, the fourth test on the impact on the City has become irrelevant and the fifth test on whether the euro would be good for jobs is a catch-all dependant on your view of the other tests.

Overall she suspects the score will not merit a pass from the Treasury.

Presenter: Margaret Doyle
Producer: Sheila Cook
Editor: Nicola Meyrick

BBC Radio 4's Analysis: 'Euro Test' was broadcast on Thursday, 12 December 2002 at 2030 GMT.