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Last Updated: Monday, 9 June, 2003, 17:45 GMT 18:45 UK
Key points: Chancellor's euro statement
The main points of Chancellor Gordon Brown's euro statement:


Convergence

  • Convergence, flexibility, investment and jobs tests have not yet been met.
  • Every decision needs to be taken in the British national economic interest.
  • "If the economic case is clear and unambiguous then the constitutional issue, while a factor of the decision, should not be a barrier to entry."
  • Stability has been put first on every economic decision since 1997 and continues on the euro verdict.
  • Since 1997 there has been "significant progress" in closing the gap between British and eurozone interest and exchange rates, as well as achieving "cyclical convergence".
  • A draft referendum bill will be published in the autumn, as well as a report on euro preparations within government.
  • The five economic tests will be reassessed next year if the Budget says there should be an assessment.

  • Flexibility

  • Globalisation means Europe has to become more outward looking. Tariff changes proposed to allow "a fully effective trans-Atlantic partnership".
  • The UK must be sure that there is enough flexibility to withstand economic "stresses and strains" before joining the euro.
  • Because Britain has problems with balancing housing supply and demand, extension of reforms promised to tackle such difficulties in the next Budget.
  • "We have shown that with the achievement of sustainable convergence and flexibility all five tests can be met."

  • Investment

  • Entering the euro with the tests not met, with the wrong exchange rate, could repeat the mistake of the Exchange Rate Mechanism and see unemployment rise, public service investment fall and growth stall.
  • There will be new opportunities for investment, particularly in foreign investment, inside the eurozone.

  • Financial services

  • The financial services test is not met.
  • The UK's financial services will remain competitive inside and outside the euro. Stability will "never be put at risk".
  • In future Parliament will be given regular "fiscal stability reports".
  • The UK will seek reform of the European Central Bank.

  • Employment and growth

  • Membership of a successful euro would benefit the British people as well as to Europe.
  • British trade inside the eurozone could increase substantially, by perhaps as much as half over the next 30 years.
  • Just as there are risks in joining the euro before the five economic tests are met, there are dangers of delaying entry once there is a clear case.
  • In the future, the government will publish, among other measures, data on regional prices and inflation, to make the UK "the most employment friendly country in the world".
  • Interest rates that were 4% above those in the euro area, were now 1% higher.
  • Reports asked for on planning and supply of housing by the autumn, with encouragement for more fixed rate mortgages in Britain.

  • Shadow chancellor Michael Howard's key points:

  • Mr Brown had only "papered over the cracks" which have riven the government over the last few weeks.
  • The five tests were "written on the back of an envelope, in the back of a taxi" to cover up the way Mr Brown's spin doctor had briefed journalists from a Westminster pub.
  • "This prime minister will pay any price to do down his chancellor."
  • "There they sit, Mr Brown and Mr Blair, united in rivalry."
  • The most senior civil servant at the Treasury had said the five economic tests could never be "clear and unambiguous", as Mr Brown had promised.
  • One of the academics whose work was used for the Treasury's assessment had said using his figures for the euro case could be inappropriate.
  • One example of the "gloss" Mr Brown had tried to put on his statement was that not a single UK region is strongly associated with the European economic cycle.
  • Accused Mr Brown of fiddling and distorting the euro evidence, such as trying to change the way Britain measures inflation.
  • Claimed the chancellor had been forced to admit that the "flexibility" test has been failed, that inflation volatility is very likely to increase inside the euro.
  • Joining the euro would mean "competitiveness would be lost, growth would be hampered and jobs would be put at risk".
  • Stressed that the Tories had learnt their lesson, following the failure of the country's membership in the ERM.
  • "It's not prepare and decide, it's not wait and see, it's hope and pray."
  • "It's time for an end to the deceit. It's time for an end to the duplicity. This is not the end of the beginning - it's the beginning of the end."

  • Mr Brown's replies:

  • Accused Mr Howard of being opposed to the euro on the grounds of dogma, even if it was in the national economic interest to join, or good for jobs and investment.
  • "They don't want just to stay out of the euro - they want to get out of the European Union."
  • The government was the party of stability, the party of Europe and the party of the future, whereas the Conservatives were the party of instability and the party of the past.

  • Liberal Democrat Treasury spokesman Matthew Taylor's key points:

  • There were many benefits to joining the euro.
  • Welcomed the chancellor's suggestion that he would take action to ensure convergence and flexibility.
  • "Just as in 1997, today the decision in truth was no, even if the words were warm."
  • The people still have "no idea" whether they will have a chance to have a referendum on the euro.



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