We can’t join euro as we no longer meet Brown’s famous ‘five tests’

The fall in the value of the pound to virtual parity with the euro has left former Blairite loyalists with a nostalgic feeling that if only Gordon Brown had not stopped us going into the European currency Britain would be in a stronger position than it is with our currency apparently in free fall.

But Brown's loyal poodle at the Treasury, Chancellor Alistair Darling, has yapped back at those who think the euro would now be a safe haven and Britain should think seriously about joining.

Darling has told colleagues that despite the convergence of the two currencies, Britain is further away from meeting the euro entry criteria than ever, because of his decision to let borrowing rip to get us out of recession.

Brown created his own 'five tests' to frustrate Blair over entry to
the euro, but the most fundamental rule for joining the club, Darling
has privately reminded colleagues, is that borrowing should be no more
than three per cent of GDP. "We can't enter the euro, because of our
borrowing," Darling has been telling his friends.

That won't stop some in the Government still questioning whether the
pound can survive on its own in these turbulent times. They are ready
to point out that existing members of the euro have allowed their own
borrowing to rise as a proportion of GDP beyond the three per cent limit.

Ex-pat Brits living in Europe on income from the UK are feeling the pinch because of the collapse in sterling. The Sunday Times reports an "exodus" of Brits coming home from France where 130,000 have settled in recent years, most of them buying homes when £1 bought €1.5 and the cost of living was favourable compared with ours.

Meanwhile banks in Newry in Northern Ireland on the border with the Republic are already issuing the euro through ATMs because of the huge cross-border business that has seen profits in Newry shops rise by 30 per cent.

Darling and Brown are braced for more demands in the New Year for the
Treasury to look again at euro entry, but they are implacable. They insist that they have greater freedom to get Britain out of the recession faster because we are not in the euro.

THE MOLE: FALLING POUND

FIRST POSTED DECEMBER 22, 2008