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Last Updated: Monday, 9 June, 2003, 17:47 GMT 18:47 UK
The euro decision: Evan Davis's view

By Evan Davis
BBC economics editor

Some say it was four-to-one against joining; some say it was three-to-two in favour.

Confused? Well, at least some things are clear.

It's clear that the test on whether the euro is good for the City is deemed passed.

It's clear the tests on whether Britain is flexible enough for the euro, and whether our economy is convergent with those of the rest of Europe, are failed.

But the two remaining tests - on investment and jobs - are only passed conditionally; they hinge on the convergence test.

Suggestions, suggestions

So, ultimately, for Mr Brown, Britain's decision on the euro really depends on convergence.

Progress has been made, according to the Chancellor, but big structural differences remain with the eurozone - housing and mortgages in particular.

To respond, the chancellor suggests a reform programme to make us converge.

He suggests a new inflation target for the Bank of England similar to that used on the continent.

He suggests changes to housing - easing constraints on house building, as well as different mortgages.

And he suggests more regionally varying pay rates.

Ups and downs

But it's doubtful these will fundamentally change the UK economy in 10 months, so while it is possible we will get a euro referendum next year, and while the Treasury is laying up the prospect of one, it is still arguably a low probability.

But for all that, the Treasury documents released today do provide a surprisingly upbeat assessment of some of the advantages of the euro.

It could boost trade with Europe by 50%, and increase our incomes by about 7%.

So the truth, now officially conceded in Treasury documents, is that the euro has big advantages - and big disadvantages.

There will never be anything clearcut about our decision.

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