Tony Blair faced renewed pressure yesterday to call an early euro referendum, after a new report by City bankers warned that British economic growth would suffer outside the single currency.
The independent research by the Lehman Brothers investment bank claimed that GDP would be as much as £5bn a year higher by 2004 if Britain joined the euro.
The report was published as Liberal Democrats and pro- Europeans stepped up their calls for the Prime Minister to be more positive on euro entry. The Government's pro-euro critics also attacked Jack Straw, the Foreign Secretary, after his first comments on the single currency were decidedly downbeat.
Lehman Brothers estimated that if Britain joined the euro, GDP growth would be 2.8 per cent in 2003 and 3.1 per cent in 2004. If it did not join, GDP growth would be 2.7 per cent in 2003 and 2.6 per cent in 2004. Joining the euro would mean extra growth of 0.1 per cent (£1bn) in 2003 and a further 0.5 per cent (£5bn) in 2004.
It also predicted that the Government would conclude its five economic tests had been passed by next summer and call a referendum in autumn 2002.
The report was seized on by Britain In Europe, the leading pro-membership lobby group. Kitty Ussher, its chief economist, said: "This highly authoritative report shows that if we join the euro when the five tests are met it would quite simply make us richer."