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Monday, 1 July, 2002, 13:51 GMT 14:51 UK
Euro tests met already, study claims
Euro notes
There is still a political element, says Prof Iain Begg
The government's five economic tests for UK entry to the euro have already been met, according to a new academic study.

Iain Begg, from the European Institute at South Bank University, says now it is essentially a matter of the government having the political will to plump for a referendum.

The five tests
Impact on the City
Jobs and growth
The government says it will give its assessment of the tests, which ministers say have to be met before a euro referendum is called, by June next year.

Pro-euro campaigners are using the study, which has been dismissed by the "No" campaign, to raise the pressure on Chancellor Gordon Brown to say when that verdict will be announced.

There is speculation the Treasury's conclusions could be reached later this year, paving the way for a spring referendum.

Political element

The chancellor says the tests must be "clearly and unambiguously" met before the government recommends entry in a euro vote.

Prof Begg, an expert in European economic integration, told BBC News Online that such wording would always mean an element of ambiguity and judgement over the tests.

But looking "reasonably" at the tests showed they had been met.

Gordon Brown is "guardian" of the tests
There was still the question of "having the political will to go forward with it", added Prof Begg.

The study, by Prof Begg and his colleagues Brian Ardy and Dermot Hodson, is based on existing research as well as fresh evidence.

Euro membership held out the hope of the general economic stability that had "so long proved a chimera for the UK", says the study.

The last four years have seen the UK gradually come into line with the economic cycles of those countries already using the euro, it continues.

'Good for the City'

The UK could still withstand economic shocks if it joined the euro, it says, and jobs and growth would be boosted.

Euro entry would also "reinforce the City's position as Europe's leading financial centre", says Prof Begg.

A study last year commissioned by the "No" campaign instead suggested the UK would continue to diverge from the eurozone economy.

But Prof Begg argues that study, and one by Oxford Economic Forecasting, failed to recognise that joining a euro is a "regime change"
Foreign exchange traders
The euro has moved on the exchange markets

The study says that meeting the economic tests does not mean euro entry would be a "costless exercise" for the UK, but that the costs would be outweighed by the benefits.

Liberal Democrat Treasury spokesman Matthew Taylor said Mr Brown should now set a timetable for the Treasury's verdict on the tests.

Anti-euro campaigners will on Tuesday launch a new cinema advert featuring comedy stars like Harry Enfield and Vic Reeves, which will run throughout the summer.

A spokesman for the No Campaign said: "This report only looks at the very short term.

"Our trade with the eurozone is growing faster than the euro countries' trade amongst themselves - we don't need the euro to trade successfully in Europe.

It was now essential to keep economic control to react quickly to events - a reason why the UK's economy was stronger than eurozone nations, he added.

Rising euro values

With the currency market in flux, many commentators are tipping the euro to reach parity with the dollar this week.

Simon Buckby, campaign director of the pro-euro Britain in Europe group, said that move would make it easier for the UK to join at a sustainable rate.

"The rising value of the euro mean that anti-Europeans who said the UK should not join the euro because it was weak have egg on their faces," Mr Buckby told BBC News Online.

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28 Jun 02 | Politics
28 Jun 02 | Politics
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