Brown confirms key euro date

The government will decide on the euro by 7 June

A decision on the UK and the euro will be announced in the first week of June, Chancellor Gordon Brown has confirmed in his Budget statement.

The chancellor said his assessment of the five tests on joining the currency would be published at that time alongside 18 supporting studies.

The government had vowed to rule on the euro within two years of the last election - a deadline which runs out in June.

A positive verdict would spark a referendum on whether the UK should join the euro.

Campaigners on both sides of the debate were watching Mr Brown's statement closely for hints on his stance on the euro.

	:	At-a-glance
Euro basics: Your need-to-know guide

And those opposed to UK membership of the currency said his comparisons between the UK economy and the eurozone suggested he is sceptical about joining the currency.

Mr Brown pointed out that long-term British interest rates were, at 4.7%, below those of Germany and the rest of the euro area.

He paid tribute to the independent Bank of England and its outgoing Governor Sir Edward George, saying the bank's freedom to set interest rates was helping the UK amid global economic uncertainty.

And the chancellor also highlighted low unemployment in the UK compared to the rate in France, Germany and Italy.

He said growth in the eurozone at 1.1% in 2001/02 compared unfavourably to the UK's average of 2% during the same period.

'Negative'

And he said manufacturing output was increasing in the UK despite falling in every other major industrialised country.

The comments were seen by George Eustice, director of the No campaign against British euro entry, as "paving the way for a negative assessment" of the five economic tests for euro entry.

"Having said that Britain's economic framework is delivering growth and stability while the eurozone is suffering high unemployment and low growth, he has no option but to conclude that now is not the time to join the euro," he said.

The UK's five euro tests

History of the euro

But Philippe Legrain, chief economist of Britain in Europe, said the Budget confirmed that there were "no economic barriers to holding a referendum on the euro in this Parliament".

He said: "Anti-Europeans were hoping that government borrowing would breach the Maastricht limit, and once again they have been proved to be incorrect.

"In the past five years interest rates have converged, our economy has become more flexible, with a concerted attack on long-term and structural unemployment, and now the exchange rate is moving towards a sustainable level.

"So the evidence shows the Chancellor's five tests will be met."

The five economic tests, set out in 1997, will examine whether joining the single currency would be good for jobs, for foreign investment and for the City.

They will also assess whether the UK economy is sufficiently in line with other European countries, and whether it has enough flexibility to adjust if not.

'Not accurate'

Earlier this week, the Treasury moved to end speculation that the Budget would include a key announcement on the euro.

Newspaper reports had said that Mr Brown had been pressing for clearance to deliver his verdict on the currency during his Budget statement.

Gordon Brown is reported to be sceptical over euro

The suggestion prompted speculation that the government is set to say the UK is not yet ready to join the euro.

A Treasury spokesman said: "This story is not accurate.

"The prime minister and the chancellor both agreed without dispute that there could be no question of doing the assessment in the Budget at the height of the Iraqi conflict."

The Financial Times had quoted a source close to Mr Blair as saying: "The decision won't come this week.

"But the prime minister has had to fight Gordon off very hard to get it delayed."