Brown does not rule out euro entry

BRITISH chancellor Gordon Brown said yesterday he has not ruled out euro entry but reiterated that the decision on entrance would depend on the results of five economic tests.

In a television interview, Mr Brown also defended Tony Blair’s position on war in Iraq, claiming Britain should, if necessary, fund it “at any cost”.

Brown, widely held to be more sceptical over euro entry than Mr Blair, dismissed a Sunday Times report that said he had privately decided Britain should not adopt the euro. “This is not correct,” Brown said of the report on the BBC’s Breakfast With Frost programme. “The assessment has not started. We are doing a tremendous amount of work. We are determined to make it [the decision] on a rigorous economic analysis.”

Mr Brown said the government’s five economic tests would be completed by June.

Public opinion remains hostile to scrapping the pound.

The Sunday Times quoted a source close to Brown as saying that he was “adamant” Britain should not adopt the euro. “He has made a clear decision that it is not in Britain’s interests to join,” the source told the paper.

The chancellor said the tests would gauge the impact of possible euro entry on trade, the housing market, on business investment, on the capital markets and would examine the flexibility of the European and British economies.

In the meantime, the government will publish in the next few days a draft bill on European economic reform. Mr Brown said the bill would oppose qualified majority voting on taxation in Europe while calling for greater economic flexibility.

Mr Brown did not challenge the interviewer’s assumption that the Bank of England would cut its economic growth forecast this week, following a cut in interest rates last week. However, he defended Britain’s growth record and its economic fundamentals.

Mr Brown was forced to admit for the first time last year that his growth forecasts had proved optimistic and some independent economists say he may have to admit error again this year. Despite slower-than-expected growth, Mr Brown ruled out delaying an imminent increase in the national insurance tax, saying the rise was essential to fund health care.

Asked about the costs of a possible war with Iraq, Brown said war, if necessary, should be funded at any cost.

Despite speculation of a widening rift between Brown and Blair over a number of key policies, he staunchly backed Blair’s stance on Iraq.

“A dictator like Saddam Hussein cannot be left with impunity to break international law, and what Tony Blair is saying and has been doing is absolutely right.”

“We’ll find the money,” he said.