UK Set to Reject Euro Again
The UK government is expected to rule out Britain joining the euro on Wednesday, as finance minister Gordon Brown delivers an updated assessment of the UK's readiness to join the euro zone.
The British government last June unveiled a detailed assessment of whether the UK was economically ready to join the single currency. The assessment - based on five economic tests - proved to be negative, with only one of the five tests passed. But the government insisted that the UK was in principle in favor of the euro and promised to look again at the issue. However, very few believe that enough has changed in the economic situation to enable Britain to join the euro and Brown is widely expected to confirm this tomorrow in his annual budget speech. Rumors are also circulating that Brown will announce a rolling assessment on the euro - telling parliament every March whether enough has changed to re-assess the five tests. But March 2005 will be just months before the next general election and the governing Labour party are unlikely to want to turn the euro into an election issue for fearing of boosting the anti-euro conservative opposition. This leaves the earliest possible decision to re-run the tests in March 2006, paving the way for a possible referendum in March 2008. If the vote is positive, then the earliest the euro could be introduced in the UK is the beginning of 2011, because the government has said that it will need 30 months to complete the changeover from pounds to euros. Therefore the UK is unlikely to join until after the first wave of accession countries.