Britain has deferred a decision on whether to adopt the European Union's common currency, the euro. Chancellor of the Exchequer Gordon Brown told Parliament yesterday the country was not economically ready to join the euro-zone. Brown, however, did hold out hope that Britain could join in the coming years, saying a special referendum could be held on the issue.
London, 10 June 2003 (RFE/RL) -- British Chancellor of the Exchequer Gordon Brown said Britain, at least for the time being, is not yet ready to adopt the common euro currency. He made the announcement yesterday to a packed House of Commons.
Brown told the members of Parliament (MPs) the British economy had met just one of five criteria -- the euro's expected impact on financial services -- set out in 1997 to gauge whether joining the common currency was in Britain's best interest. He said Britain so far had failed to meet four other tests.
"The financial services test is met. We have still to meet the two tests of sustainable convergence and flexibility. Subject to the achievement of sustainable convergence and sufficient flexibility, the test for investment and employment would be met," Brown said.
The announcement came as little surprise. Brown is well-known to be skeptical of the euro. This is in contrast to his boss, Prime Minister Tony Blair, who is said to see the euro as part of Britain's long-term destiny within the European Union.
Perhaps in a nod to Blair, Brown tempered his remarks on Britain's adoption of the euro with praise for the common currency. He went so far as to say the decision on whether to join the euro will be revisited in a year and if the five tests are made, a national referendum would be held.
"We will report on progress in the budget next year, we can then consider the extent of progress and determine whether on the basis of it we make a further Treasury assessment of the five tests which, if positive next year, would allow us at that time to put the issue before the British people in a referendum," Brown said.
Brown outlined the advantages to Britain of euro entry under the right conditions. These include an increase of trade within the euro-zone by up to 50 percent over the next 30 years, a gradual lowering of interest rates, and freedom from exchange-rate fluctuation within the euro-zone.
But Brown said Britain would also demand some reforms from the euro-zone countries, such as, for example, a reduction of trade tariffs, so that the trans-Atlantic economic partnership with America could continue.
The decision, in effect, to delay a final decision appeared to satisfy no one -- neither the pro-euro group within the ruling Labour Party nor the anti-euro Conservative opposition.
Shadow Chancellor Michael Howard for the Conservative Party said the decision to delay illustrates the inefficiency of the Labour government. "Blair goes one way, Brown goes the other way, and bang goes the Third Way. Lost in conflict, compromise, and confusion. No wonder so little under this government ever gets done," Howard said.
Brown responded to the Conservatives' criticism by launching into a convincing defense of the need to join the euro. He pointed out that 55 percent of Britain's trade is with the European Union and that 3 million jobs are dependent on the EU.
It's not entirely clear what the government will do now. Brown's relatively upbeat assessment of the euro indicates the government may now move forward and prepare the general public for a referendum on the issue.
Yet, as today's newspapers point out, any referendum soon would likely be defeated. In opinion polls, Britons remain attached to their pounds. Another factor weighing against the euro is the current weakness of the euro-zone economies, particularly Germany.
As "The Times" declared, "It has been obvious for some time that the sickly condition of the euro-zone economy and the reluctance of the voters to countenance the euro in such conditions would make any referendum this year a matter of suicidal folly."