Boost for eurosceptics?

Eddie George is thought to be a eurosceptic

By BBC business reporter Jonty Bloom

Business for Sterling is, as its name implies, an organisation of business leaders in favour of retaining the pound.

They have a perfectly sound argument, that Britain is better off with the pound.

They are rightly dismissive of the idea that the UK can't survive or even prosper without joining the euro. That is really no argument at all, as the fourth or fifth largest economy in the world we are perfectly capable of standing on our own two feet.

After all Britain became such a successful economy by using the pound and there is no reason why that shouldn't continue.

The only real argument for joining the euro is that the British economy would be even better off in rather than out.

Business for Sterling was therefore heartened by Eddie George, the Governor of the Bank of England who gave a speech in Leeds earlier this week.

He said that it was a 'relief' to him that Britain hadn't joined the euro at the start.

Not so much because of the fall of the euro but because European interest rates would have been totally unsuited to Britain's economic conditions.

With European interest rates half of those in Britain, inflation and growth would have risen to an unsustainable level and the bubble would have burst with disastrous results for the UK's economy.

Eurosceptic Eddie?

Although Eddie George (who is generally thought to be eurosceptic) slipped enough balancing comments into his speech to mollify the europhiles he also said that he thought the British and European economies were diverging further rather than converging, as they should be if Britain is to join.

Brown says the UK must meet economic goals before it joins the euro

This raises the interesting point that Britain may not have fulfilled the five economic criteria, laid out by Gordon Brown as essential before Britain can join the euro, by the early years of the next parliament.

That would mean Britain couldn't hold a referendum on joining. Business for Sterling welcomed that as a major setback for the campaign for early euro entry.

You might think that would upset the government but that isn't necessarily so.

Referendum blues

The government wouldn't want to hold a referendum that it couldn't win and the polls aren't looking favourable at the moment.

The criteria give the government the perfect excuse to bring forward or delay any referendum depending on the polls, and the apparent success or otherwise of the euro.

I might be being far too cynical but I would bet good money there won't be a referendum on joining the euro in the lifetime of the next Parliament, whoever wins the election.

That may be good news for groups such as Business for Sterling, but it comes with a price, eternal vigilance.