EMU: Tax Dispute Fuels the Antis

Our latest MORI poll suggests that the tax harmonisation dispute has caused a marked anti-EMU swing in public opinion. This has largely reversed the previous pro-EMU swing since October 1997, which had been caused by the government's statements in favour of the principle of joining the single currency.

These results suggest that the government's ability to fulfil its aim of joining EMU in 2001-02 will depend on its ability to defuse the tax issue. The UK-German joint statement on tax policy may do the trick and allow the pro-EMU drumbeats from the government and business lobbies to be heard. However, pressure from some countries for the UK to abandon its rebate poses new risks for the government's EMU aims. We shall continue to monitor sentiment.

Base rates will probably continue to fall rapidly as weak activity and price data continue to emerge in coming months. Rates are likely to fall to 5% around mid-1999 and probably slightly below 5% in late 1999 or early 2000.

Economic & Market Analysis - Sterling Weekly [pdf format - 77K]

Technical details

Latest survey was carried out between 3-9 December 1998. Sample size 1,898 people. A national representative sample was used and the survey was carried out by face-to-face interviews in the respondent's home.