Chancellor 'Cautious' over Euro; the Assessment as to Whether It Is in the British National Economic Interest or Not Will Be Comprehensive and Rigorous Gordon Brown

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Byline: Andrew Woodcock

Chancellor Gordon Brown last night sought to cool speculation that the Government was preparing for swift entry into the European single currency.

Many observers had predicted that the Government would launch a campaign for euro entry immediately it had secured its second election victory and the uncertainty has led to volatility in the value of the pound.

But in his annual Mansion House speech in the City, Mr Brown made clear that he was maintaining his 'considered and cautious' approach to euro entry.

Assessment of the five economic tests he set out in 1997 had not yet started, he said. Technical work would have to be done to enable the assessment to be made within two years, as Tony Blair promised before the election.

Mr Brown was warned by the Governor of the Bank of England, Sir Edward George, that artificially lowering the value of the pound to enable early entry could have dangerous economic consequences.

Sir Edward said that the current strength of the pound against the euro was a 'potentially serious obstacle' to entry and welcomed Mr Brown's adoption of a cautious approach to the timetable for entry.

Mr Brown described the Government's approach as one of 'pro-euro realism'.

He said: 'Pro-euro because, as we said in 1997, we believe that - in principle - membership of the euro can bring benefits to Britain.

'Realist because to short-cut or fudge the assessment, and to join in the wrong way or on the wrong basis without rigorously ensuring the tests are met, would not be in the national economic interest. …