Expert View: Blair must kill off the famous five

There are some documents whose historic value is inestimable. One such is the sheet of paper used after dinner by the leaders at the Yalta conference to divide up the map of Europe. Over port and cigars, and at the stroke of Stalin's blue pencil, the people of Greece were exchanged for the millions of Romania. It took a long time but last week that wrong was righted when the 10 states of new (eastern) Eu- rope finally acceded to the European Union and we burnt the last tatters of the Iron Curtain.

Sadly, we were also remin- ded last week that the back of the envelope is still a crucial tool of contemporary statecraft, at least in the economic field. Oh, to have been in that car speeding to JFK when Gordon Brown and a couple of trusted advisers supposedly cooked up the famous five economic tests that will dictate the future of Britain in Europe. The Treasury spin is that these were the result of "extensive consideration" and are now undergoing "exhaustive research". But the suspicion remains that they were dreamt up on the spot as the best way of getting what the Chancellor wants.

The tests are a mishmash. The question of economic con- vergence sits alongside the even more subjective measure of "Europe's flexibility to cope with economic change". Tacked on are three issues that any Europhile would consider a walkover: the effects on employment, the City and inward investment. We are told the "exhaustive research" is nearly over. But I fear this is politics masquerading as an economic fudge, and it couldn't happen at a worse time.

For we awake to a "new reality". The phrase, used by Jack Straw to describe the post-war world of international relations, had beneath it an element of menace – and not just towards rogue elements in the Middle East. By opting to side with the US against "old Europe", we have damaged our standing there. Furthermore, the public spat between the European partners has had a dramatic effect on UK public opinion on the euro. One opinion poll claims that 80 per cent of the electorate now opposes it.

This is not the time for phoney economics. "Convergence" is a mirage. Our economy will never exactly match the average measures of growth and inflation for the eurozone, nor do those of most of its existing members. Within the UK, there is a similar mismatch between the economy of, say, the South-east and that of Scotland. The former is slipping towards slump, the latter is still in boom. It doesn't stop the UK having one policy, nor should it stop Europe. And how will we ever properly decide on a loose issue like "eco- nomic flexibility"? The Treasury can manufacture any argument the Chancellor likes.

To realise the fallacy of this position, one has only to apply the same five economic tests to Britain remaining outside the eurozone. If you consider interest rates, economic growth, tax rates or government spending as a proportion of GDP, we are much closer to Europe than either the US or Japan, let alone the emerging markets. In the "'new reality" (which looks suspiciously like a return to arms, autocracy and aggression), protectionism is on the upsurge. What hope for a small, independent economy buffeted between the three big trading zones? America's messenger boy to Europe is not a comfortable place to be.

More than this, joining the euro is not just an economic decision; it has political and cultural dimensions. Isolation can be only temporary. Eventually, we must choose between the American and continental social systems, as much as between their different economic models. We must do so carefully.

It's time for No 10 to wrest back control and scrap the five tests. Let's end back-of-the-envelope decision making.

christopher.walker@tiscali.co.uk