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Last Updated: Wednesday, 7 May, 2003, 13:23 GMT 14:23 UK
The case for staying out of the euro
James Frayne, campaign manager of the No Campaign, sets out the case against UK membership of the single currency.


There is a general acceptance that the Treasury will have to deliver a negative verdict on the euro, and say that the economics are not yet right to join.

However, there is still some debate over how long the government will rule the euro out for.

While the indications are that the Treasury wants to rule out the euro for this Parliament, many pro-euro politicians want to join the euro in as little as a year's time.

The Treasury's scepticism is understandable as the economics are clearly not right to join now.

Our economy is different to the Eurozone which means we are affected differently by changes in the global economy, and also by changes in interest rates.

This would make it very difficult to live with the single interest rate set by the European Central Bank in Frankfurt.

In the euro, we would lose the flexibility to respond quickly to changes in the economy
For example, our housing market is structured differently to the Eurozone - with more reliance on variable rather than fixed-rate mortgages.

But we differ in other ways too. More of our trade goes to countries outside the eurozone, and we rely very heavily on the US for our inward investment.

In the euro, we would lose the flexibility to respond quickly to changes in the economy.

Rules

However, perhaps the best way of judging whether Britain should join the euro is by looking at how those countries that are already in are performing.

Since the introduction of euro notes and coins, unemployment in France and Germany has risen significantly while it has fallen in Britain.

The European Commission's own growth figures show that the British economy is growing twice as fast as the Eurozone.

Also, the rigid rules of the stability pact - which stipulates that budget deficits have to be below three percent even in a downturn - has led to spending cuts.

Added to all this, Eurozone citizens also found that prices rose during the changeover.

With the economics pointing so clearly towards a negative assessment, it is not surprising that opinion polls show that the majority of people want to keep control of our economy by keeping the pound.

Predictable

The fact that pro-euro hardliners are calling for Britain to join the euro now is predictable, but it is looking highly unlikely the government will take such a risk.

What business really wants now is the certainty to plan ahead for the next few years, not yet more speculation on what the government is going to do with the British economy.

As the Director-General of the CBI, Digby Jones, recently said, "The last thing we want is an annual reassessment. The UK economy is flexible and stable. We need certainty to keep it that way."

The government should avoid uncertainty, and rule out the euro for this Parliament.



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