Jury Is Out On Euro, Study Says
Britain will be unable to judge for at least five years whether it is safe to adopt the euro, Europe's single currency, the House of Commons influential all-party treasury committee reported April 28.
But the committee, headed by the pro-European governing Labour Party lawmaker Giles Radice, also warned it could be costly for Britain to remain outside the currency.
The euro starts on Jan. 1 next year when 11 of the 15 European Union (EU) nations plan to adopt it. The committee's report said that it would be impossible "to judge clearly and unambiguously the success of EMU (European Monetary Union) ... for at least five years."
Prime Minister Tony Blair's government has signaled it may call a referendum on the euro soon after the next national elections, due in 2002. Although Britain easily meets the economic criteria to adopt the euro, the prospect of abandoning the pound sterling is politically sensitive.
The committee said any decision to join would be taken on a "political and economic assessment of the balance of national advantage."
Before calling a referendum on the euro, the government should produce a "comparative assessment of the consequences of entry and of staying out in the long term," it added. The committee reached no conclusions about the economic consequences of Britain's decision to stay out of the single currency, saying evidence suggested this would bring "both opportunities and costs."
European Union leaders gather in Brussels May 2 to confirm the participating nations when the euro takes effect New Year's Day. Other topics include who will lead the European Central Bank and the rates at which nation's currencies will be locked together in preparation for the euro.