Pressure grows for early vote on euro after report says tests have been met

Pressure grew on the Government last night to call an early referendum on joining the euro after a leading economic think-tank declared that Britain had already satisfied Gordon Brown's five tests for membership.

Advocates of the single currency seized on a report by the National Institute of Economic and Social Research, which said the Chancellor's criteria "have all been passed".

Both Romano Prodi, the president of the European Commission, and Chris Patten, one of Britain's European commissioners, criticised the Government's cautious approach to the euro this week.

Ministers have repeatedly stressed that a referendum on membership will not be called until the Government is satisfied its tests have been passed. Although Mr Brown is due to release his own assessment by June 2003, speculation is growing that he will announce his conclusions this autumn, paving the way to a referendum next year.

The report said: "We would argue the Chancellor's five tests can be seen to be answered in the affirmative, and that the case for joining is clear." The tests, laid out nearly five years ago, are: whether Britain's economy has converged with the rest of Europe; whether the new monetary system is sufficiently flexible; will boost investment; create jobs; and safeguard the City's position.

The institute said convergence had taken place, that the economies of both Britain and the eurozone were flexible and that membership of the currency would attract investors, increase jobs and pay and prevent financial services relocating to Frankfurt.

Michael Heseltine, a former deputy prime minister, said: "This report, published by one of the most respected independent think-tanks in the land, is enormously important because it leaves the Government nowhere to hide. If the institute can reach conclusions, so can the Treasury."

Charles Kennedy, the Liberal Democrat leader, said: "This research makes it much harder for the Treasury to make a negative assessment of the tests. In which case, it is time the Government stopped dithering and announced a date for the referendum."

A spokesman for the Treasury said: "We will do our own rigorous and comprehensive assessment of the tests."

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