UK must join euro or quit EU, MPs told

Britain will ultimately quit the European Union unless it takes a decision to adopt the euro, a leading independent economist warned yesterday.

Martin Weale, director of the National Institute for Economic and Social Research, told MPs it would not be sustainable for the UK to be one of a few ­ or perhaps the only ­ countries in the EU but outside the European single currency.

He said that under plans for EU enlargement within a few years the only countries on the European continent not to be in the euro would be "Ukraine and parts of White Russia".

He told the Treasury Select Committee: "Either Britain will join monetary union fairly soon or it is quite likely we would pursue a divergent path that would lead to us leaving the European Union. A situation where the EU consists of 20 countries but one of them is not a member of the single currency seems untenable."

Mr Weale, a supporter of UK euro membership, was giving evidence as part of a lengthy inquiry by the committee into the UK and the single currency.

David Begg, a professor at Birkbeck College, London, said he believed Britain would certainly join a European monetary union "in the long run". He said that benefits from technical progress, lower transaction charges, a stable exchange rate and convergence of regulations argued in favour of UK membership. "For the UK the issue is when not whether," he said.

But Roger Bootle, director of the consultancy Capital Economics, said it was by no means inevitable that the UK would have to join up, adding that he foresaw Europe's decline as a major world economic power.

"There are still several major, big structural differences between the UK and the eurozone such as patterns of trade and the housing market," he said.

Geoffrey Dicks, the chief economist at the Royal Bank of Scotland, said he believed the economic arguments were "finely balanced" and that the decision on whether to join was ultimately political.

* Support among British voters for membership of the euro has hit its lowest level for a year, according to a poll by CSFB published yesterday. Public support has fallen this month to 32 from 42 per cent in January 2002. More than half of the respondents to the poll did not think it would be a good idea for the UK to join the euro in the next two or three years, while 12 per cent of respondents were undecided.