Experts unite to tell Brown: don't delay over euro

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Indy Politics

The Chancellor, Gordon Brown, was confronted by the collective might of more than 300 of the world's most eminent economists yesterday, who told him to declare that the UK has passed the five economic tests which will place it on track to join the euro.

The Chancellor, Gordon Brown, was confronted by the collective might of more than 300 of the world's most eminent economists yesterday, who told him to declare that the UK has passed the five economic tests which will place it on track to join the euro.

The economists, who include Paul Volcker, the former head of the US central bank, Stanley Fischer, a former IMF managing director, the Nobel laureate Professor Robert Mundell and Lord Kingsdown, made their declaration before Mr Brown's own announcement about the result of the five tests, expected within three weeks.

"With only days to go until the Government announces the results of [the] tests, it is clear that not only is the economic evidence overwhelmingly in favour of euro entry, so is the opinion of the economics profession," said Phillippe Legrain, chief economist of the lobby group Britain in Europe (BiE) group, which published the list of pro-euro economists.

The list was reminiscent of the letter to The Times in 1981 denouncing the monetarist policies of Margaret Thatcher's government.

The call is echoed by Martin Weale, head of the National Institute for Economic and Social Research think tank, who, in today's Independent, says membership of the euro would eliminate swings in exchange and interest rates. Mr Weale says: "Joining the euro area will provide a more stable environment and one in which the UK should be able to compete effectively with the other European economies."

The appeal to Mr Brown, by 330 economists, was accompanied by the announcement by BiE of the launch of an Economic Council of Great Britain, to demonstrate the weight of economic support for British entry and provide a group of experts to argue the case.

Armed with a body of support including former heads of the Bank of England, the United States Federal Reserve and the International Monetary Fund, Mr Legrain insisted that a negative assessment of the five tests would be greeted "with scepticism, even disbelief" by economists. "Short-term political considerations must not be allowed to take precedence over the overwhelming economic case for euro entry," he added.

His economic council will be chaired by Professor Lord Layard of the London School of Economics. It includes Lord Kingsdown, who as Robin Leigh-Pemberton was Bank of England governor from 1983 to 1993. Other members will be Willem Buiter, a recent member of the Bank's rate-setting committee, and Andrew Crockett, outgoing head of the central bankers' bank, the Bank for International Settlements.

Patrick Minford, a Eurosceptic former adviser to the Conservatives, played down the significance of the famous 1981 letter. "That letter was signed by 364 economists and they turned out to be totally wrong," he said.

Mr Brown also re-entered the debate on the euro yesterday to dismiss claims that disagreements between Britain and some European partners over the war in Iraq would affect the decision.

"It should neither be made on short-term considerations based on foreign policy or based on other events that have happened this year," he said. "It should be made on a long-term assessment of the national economic interest."

Earlier this week BiE published a report commissioned from independent economists showing that the UK economy would suffer from postponement of entry.

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