Blair urged to set out UK path to euro

Tony Blair should set out a clear strategy for Britain’s entry into the European single currency, according to a report by a think tank published today.

The report by the Foreign Policy Centre said a “euro strategy group” of top British Cabinet ministers should be established to enable the smooth transition into the single currency should the public vote “yes” in a referendum.

The report said: “Without such a strategy, there is a danger that the decision about entry could be taken without sufficient forethought or botched altogether.”

The think tank, which counts the British Prime Minister as its patron and Robin Cook as president, said the hurdles to entry could easily be cleared.

British Chancellor Gordon Brown should announce publicly that he considers sterling overvalued, which “might influence the market in a downward direction, thus strengthening the British hand in negotiations with our euro partners over a sustainable exchange rate,” the report, How to Join the Euro, said.

Its author, the pro-euro British Labour peer Lord Radice, said: “Whether we join this year or next year, sooner or later we are going to join the euro. We can’t go on hiding behind the five economic tests forever. It is therefore high time that we had a strategy.”

Mike Rake, chairman of KPMG which sponsored the report, said: “We have already seen a decline in the UK share of foreign investment into Europe since the launch of the euro, as well as increasing trade within the euro-zone from which the UK is excluded.

“I also worry about the City of London – the crown jewel of our economy – if the UK is to stay out of the euro or again put off the decision whether to join.”

There were economic and political costs of staying out, the report said, including a continuing risk of exchange rate instability.

“It is difficult to see how the UK’s position can be sustained if this country remains outside the euro,” it said.

“Outside the euro, Britain’s ability to influence the future shape and governance of the enlarged EU will remain seriously limited.

“(Therefore) it is essential that the Government draws up an effective strategy for entry which would then enable us to make up for a late start and to take advantage of the opportunities which joining the euro would open up for the UK.”

The British Treasury must complete its assessment of the five economic tests by June this year.

It came as Gordon Brown insisted Britain’s entry into the European single currency has not been ruled out.

The British Chancellor yesterday said the British Treasury’s assessment of whether Britain should join the euro would be “rigorous and comprehensive”, but revealed it had not yet started.

Anti-euro campaigners viewed Mr Brown’s remarks as cautious and said the global economic uncertainty meant the British Government could not recommend that Britain join during this Parliament.

A British Treasury spokesman said: “The Government’s strategy is to prepare and then decide. The Government has set the five economic tests to establish whether membership would be in the national economic interest.

“The assessment of the tests will be comprehensive and rigorous. The technical and preliminary work is underway. 18 separate studies are being conducted. The assessment will be done by June.”

The British Prime Minister’s spokesman said the strategy had already been set out and was underlined yesterday by Mr Brown.

Lord Radice was a former chairman of the British Treasury select committee when he was a Labour MP and is now chairman of the Lords European sub-committee on economic and monetary affairs.

He is on the board of Britain in Europe and the European Movement.