UK 'could leave EU', MPs told

MPs are examining the pros and cons of the euro

The UK will eventually leave the European Union if it does not join the single currency, a leading economist has told MPs.

Martin Weale, director of the National Institute for Economic and Social research and a supporter of euro membership, told the Commons treasury committee that it would become unrealistic for the UK to one of a handful of countries in the EU but outside the eurozone.

A situation where the EU consists of 20 countries but one of them is not a member of the single currency seems untenable

Martin Weale

He was giving evidence as part of the committee's inquiry into the UK and the euro ahead of a Treasury ruling on whether five economic tests for entering the currency have been met.

He said: "Either Britain will join monetary union fairly soon or it is quite likely we would pursue a divergent path that would lead to us leaving the European Union.

"A situation where the EU consists of 20 countries but one of them is not a member of the single currency seems untenable."

The committee was hearing from economists as part of their inquiry.

Differences

Roger Bootle, director of consultancy Capital Economics, said it was not inevitable that the UK would join the euro.

He said: "There are still several major, big structural differences between the UK and the eurozone such as patterns of trade and the housing market."

But David Begg, a professor at Birkbeck College in London, said he believed the UK would eventually join the single currency.

He pointed to the potential benefits of lower transaction charges and a stable exchange rate.

Royal Bank of Scotland chief economist Geoffrey Dicks said he believed a decision on joining the euro would ultimately be political.

He said the arguments for and against were "finely balanced".