Britain ready to join euro club, says study

BRITAIN’S economy has become more like France and Italy in the way it responds to sudden changes in prices, suggesting Britain may be ready for euro membership, an academic study said.

“The correlation of inflation shocks, such as a surge in oil prices in the UK with those in France and Italy has increased sharply recently,” according to a study by Stephen Hall and Brian Yhap of London’s Imperial College and the National Institute of Economic and Social Research.

“On this test, the UK is ready to join the monetary union.” Chancellor of the Exchequer Gordon Brown has promised by the first week of June to assess his five tests on whether adopting the euro would be in Britain’s economic interest.

In judging the case, the British Treasury will consider whether joining is good for investment, financial services, and employment. Mr Brown and Prime Minister Tony Blair have promised a referendum in the event they recommend joining the euro, a vote that would be difficult to win, opinion polls suggest.

Membership of the euro would remove control of monetary policy from the Bank of England and hand it to the European Central Bank, which sets interest rates for the 12 nations currently using the euro.

Britain, Denmark and Sweden, the remaining members of the 15-nation bloc, have opted to keep their national currencies for now. Swedes vote in September.