Declan's week: The Big Split

Our Business Presenter Declan Curry returns from holiday, just as speculation hots up over whether Britain will join the Euro.

You know what it's like when you return from holiday. No one really wants to go back to work. The alarm call seems earlier and more vicious than usual. Your brain has stopped working the way it used to.

If you're lucky, you'll have one day of post-holiday bliss, but then it's head down for an unusually long, hard week. By the end of it, you feel you need another vacation.

Well, that's how I felt after my week away in Devon. And to cap it all, I found out that I'm making it harder for myself - simply by living in the south of England. If I lived and worked in the north of England, life would be sweeter.

It's not because the air is cleaner, the traffic jams are shorter and the bitter tastes better there. My money would go further too. Pay packets tend to be bigger in the south (especially in London where many workers get a top-up). But that doesn't make up for the higher prices we southerners pay for things like housing.

North-South divide

When Breakfast was in Manchester last autumn for the annual CBI meeting of Britain's big bosses, the Northwest Development Agency was out in force, reminding those from the south that housing and childcare are far cheaper than in London.

This week, the stockbrokers at Barclays have been punching some numbers into their calculators. They looked at the whole of England and Wales, and worked out that of the top 10 places where people have most cash to spend, eight were in the north.

The north-south gap here at home shows us the Euro issue isn't really about "clear and unambiguous" economics... It's a balancing act - with a good dose of politics thrown in too.

The richest place in the country in terms of spare cash is Tatton in Cheshire, home of David and Victoria Beckham. Now, Tatton has always been posh - I found that out when I worked in Manchester years ago. (All the glamour girls with the best designer gear in the office were from Cheshire.)

But look at some of the other names at the top of the rich list - Sheffield Hallam, Leeds North East, Altrincham, Harrogate.

The Peaks and Pennines are dusted with gold. The three poorest areas, by the way, were all boroughs of London.

Diff'rent folks

There's been a north-south gap in the economy for as long as any of us can remember. The south of England makes much of its money from services and banking. The north of England, along with Wales and Scotland, relies more heavily on manufacturing and industry.

Even that is too broad-brush. There are massive differences between the south east of England and the south west; between the English north-west and the north-east; between central Scotland and the Highlands and islands; between north and south Wales.

They all rely on different industries; have their own rates of house price inflation (and indeed different rules for buying houses in Scotland), and slightly different charges for goods, petrol and services. Unemployment is different in each region, as are wage packets and levels of investment from outside.

But they all use the same form of money - the pound sterling.

Euro zone

That's worth bearing in mind when you hear all the arguments about the Euro, and whether our economy is too much out of line with the continent to join, or whether investment or jobs might suffer if we don't. We have those differences and pressures here at home, too.

But we have decided that there more to be gained from having a single British economy and currency than there is to be lost by - for example - keeping interest rates painfully high for Northern industry because house prices in the South need to be kept under control.

Will that work across the whole continent too? Some business leaders think yes, others of equal distinction and intelligence say no. No doubt you will have your own view.

The north-south gap here at home shows us the Euro issue isn't really about "clear and unambiguous" economics, as the Chancellor would like us to believe. When you hear about the Chancellor's five tests for the Euro, don't imagine it's a checklist with black and white answers. It's a balancing act - with a good dose of politics thrown in too.

Wiggle room

We now know - because the BBC's political editor Andrew Marr has found out - that the Chancellor has decided the Euro has failed his tests. But he didn't tick yes or no boxes. All the tests have wiggle room, and could have been argued about fifty different ways.

The Chancellor made a judgement call - weighing the risks of joining a single European economy with one single interest rate against the advantages of joining a massive single market, with a stable currency and clear prices.

For now, he's decided the risks are greater than the advantages - so his answer to the Euro is, "not yet". The next question he's got to answer is - when to come back and make that judgement call again?

He'll do it when he thinks things have changed - but the tests give him plenty of freedom.

For example, if one of the obstacles to joining the Euro was the different state of the housing markets in the UK and the continent, he could argue it two ways.

He could say the difference was caused our house price bubble - which is expected to end this year or next. That would allow him to come back to the Euro question before the next election, because the obstacle might have gone away by then.

Or he could say the obstacle is actually the different types of mortgages on both sides of the Channel.

We have loans with frequent changes in interest rates; on the continent, they tend to have long-term loans with borrowing costs locked down for 20 years. If that's the important difference, it could take decades to sort out - so no Euro for us for many, many years.

That's a lot of wiggle room.

The answer to the question "when next?" is as much about politics as it is economics. In fact, politics might have the whip hand. After all, another good reason to look at the Euro question again could be the appointment of a new Chancellor.

Declan Curry is Breakfast's regular business presenter, bringing you live updates from the London Stock Exchange every weekday morning from 6am.