Euro: Referendum decision in March 2004

In a speech marked by loud outbursts from the House, Brown said joining the euro was one of the ‘momentous economic decisions the country has ever faced’.

But he said the UK economy had not achieved the economic tests on convergence, flexibility, employment and investment, but it had passed the financial services test

To prepare the country for joining at a future date, he said major economic reforms would be made to ensure that the five economic test could be met. Amongst these, the inflation target will be changed to the consumer price index at the November pre-Budget report.

Brown said earlier that joining the euro at the right time would result in greater cross-border trade. He said Britain inside the euro could see trade within the European Union increase by 50% over the next 30 years.

He said 55% of UK trade was now with European partners, but he also spoke about the importance of reducing tariffs and regulations with Europe and the USA to promote cross-border trade.

And in a remarke which acknowledged that there was not yet enough public support for joining the euro, Brown said a future pro-European consensus could be built on a platform of improved labour market flexibility within the EU and a program of structural economic reforms already agreed to by EU finances ministers.

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