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Monday, 10 February, 2003, 00:19 GMT
'Action needed to avoid euro botch'
Pasta in the shape of the euro symbol in Italy
Radice says euro practicalities must be addressed
The decision on the UK euro entry risks being "botched" unless ministers produce a strategy on the practicalities of joining, says a leading Labour peer.

Giles Radice, the pro-euro former chairman of the Commons Treasury Select Committee, says Tony Blair should head up a new strategy group to supervise possible euro entry.

His call comes a day after Chancellor Gordon Brown rejected reports that he had ruled out euro entry, saying the assessment had not even begun.

We can't go on hiding behind the five economic tests forever

Giles Radice
Labour peer
With the government's verdict due by June, Lord Radice warns the Treasury not to repeat the "excessive caution" it showed over past European projects.

The Labour peer, now chairman of the Lords European Sub-Committee on Economic and Monetary Affairs, makes the comments in a pamphlet for the Foreign Policy Centre think-tank.

'Big picture'

Lord Radice says: "Whether we join this year or next year, sooner or later we are going to join the euro.

"We can't go on hiding behind the five economic tests forever."

He argues it is important the economic tests are met, but "it is essential to distinguish the wood from the trees".

That means the government should take account of broader economic questions, such as the opportunities euro entry would bring and the costs of staying out, he continues.

If the government decides the tests have been passed, there will be a referendum on entry.

Lord Radice says the government must draw up a strategy for dealing with key practical issues as soon as possible.

It should tackle such questions as the UK exchange rate, the timetable and costs of entry, legislation for joining the eurozone, and issues about the European Stability and Growth Pact.

"Without such a strategy, there is a danger that the decision about entry could be taken without sufficient forethought or botched altogether," says Lord Radice.

Converged?

He suggests Mr Blair should chair a new group including the chancellor, the trade secretary, the lord chancellor, the deputy prime minister, the work and pensions secretary and the leader of the House of Commons.

That idea is unlikely to find favour with Mr Brown, who is currently seen as the guardian of the question of euro entry.

Gordon Brown
Brown says there are 18 studies under way
Lord Radice asserts that the UK economy has now largely converged with the eurozone.

If the UK decides to join, the chancellor should publicly announce that he considers sterling is overvalued, he says.

This, combined with a stated intention of joining, could help reduce the value of sterling and help ministers negotiate a competitive exchange rate for entry, he argues.

Investment worries

Lord Radice also argues small businesses will need help coping with the practicalities of a currency change.

Ministers should consider allowing such firms to write off all or part of their IT upgrade costs for the time between joining the currency and adopting euro notes and coins, he says.

Lord Radice warns against the costs of failing to join, a message echoed by Mike Rake, chairman of accountants KPMG.

Mr Rake is expected to say on Monday that the UK's share of foreign investment in Europe is falling and he is worried about the impact staying out or delaying entry could have on the City of London.

'Historic decision'

On Sunday, Gordon Brown promised that the assessment of the five economic tests would be "rigorous and comprehensive".

Mr Brown told BBC One's Breakfast with Frost: "This is the most difficult, the most important economic decision that this country has had to make on economic policy."

He said his assessment of the tests would examine all aspects of the effect of euro entry on the UK economy.

Eighteen studies were being undertaken before assessment of the tests could begin, he explained.

A White Paper on European economic reform calling for more flexibility in the European economy will also be published in the next few days.

 WATCH/LISTEN
 ON THIS STORY
Chancellor of the Exchequer Gordon Brown
"We're determined to make the decision based on rigorous analysis"

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20 Feb 03 | Politics
20 Feb 03 | Politics
21 Nov 02 | Politics
05 Dec 02 | Business
20 Feb 03 | Politics
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