War warning for eurozone

War warning for eurozone

A round-up of the latest stories on the euro and the debate about whether the UK should join the currency.

War in Iraq could lead to stagnation or recession in the 12-member eurozone, the European Commission has warned, says The Times.

The commission's latest quarterly analysis of developments in the eurozone also saw Brussels reduce its growth forecast for the eurozone to "around 1 per cent" compared with its earlier projection of 1.8 per cent.

That figure could be cut further depending on the fallout from conflict in Iraq, it said.

Klaus Regling, the head of the Commission's finance directorate-general, said: "Stagnation or recession in the euro area cannot be excluded."

But the Times said he stressed this was a worst-case scenario, not a forecast.

According to the Guardian, a new poll has showed strong opposition to the euro in one of Britain's largest - and most pro-European - trade unions.

An internal poll of 1,252 stewards in the GMB union found that 67% do not want to join the euro, says the paper.

The union will soon have a new leader after the pro-European general secretary John Edmonds said he planned to step down.

Spanish prime minister Jose Maria Aznar is pressing Tony Blair to join the euro, says the Daily Telegraph.

In an interview with the newspaper, Mr Aznar says the prime minister will be "running on one leg" as a European leader if he keeps the pound.

Mr Aznar suggested that Mr Blair - who is thought to harbour ambitions towards a key European post when he leaves Downing Street - could be a key figure in the future leadership of the European Union.

"I would like the United Kingdom to join the euro," he said. "That would be good for Europe, for the transatlantic relationship and for the UK."

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Euro campaigners on all sides were disappointed by Chancellor Gordon Brown's appearance before the Treasury committee, the Guardian reported.

The paper said the non-commital performance had come despite "wild predictions" of a dramatic announcement.

The chancellor instead merely confirmed that the five tests would be completed by the government's deadline in June, the paper says.

Other newspapers seized on Mr Brown's refusal to be drawn on what he would do in the event of a negative assessment of the tests.

This was seen as the chancellor not ruling out a negative view on the euro when the assessment is published.

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Delaying a referendum on the euro until next year would put the case for the currency in a 'coma', union leader John Edmonds has said.

The Guardian quotes Mr Edmonds, leader of the GMB, as saying it would be deeply damaging to put the issue on hold.

"It will be put in a coma from which it will never emerge," he said.

He was responding to a report in the Independent which said Tony Blair had ruled out calling a poll on the euro this year.

The paper said the prime minister sees public hostility to the currency as so great that a four-month campaign could not be won.

Instead, he is said to favour a campaign lasting between six months and a year - even if the Treasury rules in June that the tests on euro entry have been passed.

But he is said to be keen to hold a vote before the next general election.

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In an article for The Times, the pro-euro former Cabinet minister Peter Mandelson urges Chancellor Gordon Brown to look ahead when he makes his decision on the five tests.

He says the chancellor should examine what the economic outlook might be two years after a referendum.

He goes on to say the UK cannot forever remain a "half in, half out" member of the EU.