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Last Updated: Monday, 9 June, 2003, 15:10 GMT 16:10 UK
Q&A: What does the euro decision mean for you?
Chancellor Gordon Brown has decided that Britain is not yet ready to adopt the euro.

What does this mean for you? What are the financial and economic implications? And will the endless media speculation now come to an end?

BBC News Online explains.

What does this mean for the pound in my pocket?

That depends on whom you listen to.

Eurosceptics will tell you - with unarguable logic - that this decision makes no material difference whatsoever.

It's business as usual - and for Britain, business is ticking over pretty nicely at the moment.

Fans of the euro, meanwhile, say the decision to postpone membership has what economists like to call "opportunity costs".

One recent report, sponsored by the Britain in Europe campaign, calculated this cost as 120bn over the next two decades - or 100 for every Briton every year.

These costs, economist Robin Marris said, would be the result of lost investment and lost trade.

But Professor Marris' figures are an estimate of intangible future gains possibly foregone, rather than existing advantages eliminated.

Why did Mr Brown say no to the euro?

Mr Brown says Britain and the eurozone are out of kilter.

This means we are at a different stage in the economic cycle, growing solidly and suffering inflation while the eurozone slows down and may even fear deflation.

But it also means that our economy is a different shape from many of our neighbours': we are more vulnerable to swings in house prices and interest rates, for example, and have freer labour laws and lower unemployment.

Some argue that these structural differences are not as daunting as they appear, that the old notion of shiny, go-ahead Britain versus sluggish, unreconstructed Europe is a 1980s throwback.

Certainly, the economic gap between Britain and Europe has narrowed in the past few years, as Mr Brown himself admits.

But these things move slowly, and the chancellor felt it was still prudent to wait and see.

Is the chancellor's decision popular?

On the whole, yes.

Public opinion is pretty solidly against the euro: opinion polls show about two-thirds of Britons would vote against, almost half of whom are die-hard europhobes.

The pro-euro camp is about 20-25% of the population, and their zeal cannot compete with the eurosceptics.

Business and the City seem to be more neutral on the issue than pro-euro campaigners had hoped.

The relative strength of the euro, after years of weakness, has done nothing to boost its popular appeal - and British exporters have been given a boost by the weak pound.

But Labour's core supporters, both inside the party and among the the liberal metropolitan middle classes, are more solidly pro-euro.

It is for their sake that the government has been making a lot of Europe-friendly noises in the past few days.

But hasn't the chancellor ruled out joining the euro?

No, he has actually said the government wants to join the euro, and he has announced a number of initiatives to make that possible.

One of the five tests has been met, says Mr Brown: euro membership would help the City.

Reforms will be put in place to ensure the tests on convergence and flexibility are met. Once this happens, the tests on jobs and investment will also have been passed, he said, and Britain will be ready to adopt the euro.

What does this tell us about power games in the government?

Commentators have been keen to avoid portraying this as a boring monetary story.

Instead, the euro debate is seen as the latest and toughest round in the struggle between Gordon Brown and Tony Blair - a struggle whose roots lie in a possibly mythical agreement that Mr Blair would step aside for Mr Brown.

By this logic, Mr Blair, long an enthusiastic fan of the euro, has been given a bloody nose once again.

In fact, as Treasury victories go, this is not a particularly crushing one.

The decision to postpone euro membership has been hedged about with all sorts of pro-European language, and the overall feeling is that Britain will adopt the euro - just not yet.

So what happens next?

This decision does not even begin to end the speculation.

The door is still open - in theory - to a referendum in this parliament.

But the idea of the government overriding Mr Brown's advice at any time is surely incredible.

Instead, there will be some sort of mounting campaign to disseminate euro information, or propaganda, depending on your point of view.

The government will also make some euro-oriented tweaks, such as recalculating inflation on the European model - a move that Mr Brown said would be implemented without hitting index-linked pay and pensions - and getting involved with reform of the European Central Bank.

And tensions will come to a head again in September, when Sweden holds a referendum on joining the eurozone.

When Mr Brown unveils his next budget next spring, there will be yet another assessment of euro-readiness.

One thing's for sure: it's not over yet.




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