Single European Currency Tracker, March 2002

Our latest MORI poll shows that public support for EMU entry has fallen again after jumping in January. The balance of opinion against EMU entry is similar to the average of the past four years.

As a result, we are cutting our judgement of the probability of EMU entry back to 33% -- the same as our view in late 2001 -- whereas the pro-EMU swing in January caused us to lift this probability to 40%-45%.

The main obstacles for the pro-EMU camp are, as always, the lack of a compelling economic case for EMU entry plus the lack of a strong lead from the top of the government. The government, reacting to voters' concerns, seems to be prioritising public services rather than EMU. But, by not daring to take a clear pro-EMU lead, the government reduces the chance that the preconditions for EMU entry (a big shift in public opinion and a lower sterling) materialise. But whether the UK joins EMU or not, we remain bearish on gilts, especially the two-year.

Technical details

Latest polling conducted between 28 February and 5 March 2002. Sample size 1,991 people for latest survey, and similar for earlier results.

Sources: MORI Financial Services and Schroder Salomon Smith Barney

UK -- Balance of Opinion Over EMU Entry, 1991-March 2002