Single European Currency Tracker, May 2002

Our latest MORI poll -- carried out just after the 'Paxman' interviews -- suggests that PM Blair's pro-EMU comments have failed to generate much rise in public support for EMU entry. Support for EMU entry has risen slightly since March, but remains below January's level and little changed from late 1997 -- when the Government first committed to the principle of eventual EMU entry.

We continue to put the chance of EMU entry in 2003-05 at about one in three. The government still does not have a clear economic case for immediate (or near-term) entry, and we suspect that such a case would be needed to shift sentiment enough to make an EMU referendum winnable.

But, the EMU debate is not settled and the next six months will be crucial. Markets do not yet price in EMU entry and, even though we suspect that the UK will not join, we remain bearish -- on value considerations -- on long gilts and sterling versus the euro.

Technical details

Latest polling conducted between 16 and 21 May 2002. Sample size 2,002 people for latest, similar for earlier polls.

Sources: MORI Financial Services and Schroder Salomon Smith Barney

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