Our latest MORI poll suggests that public opinion remains heavily against EMU entry. The balance of opinion against EMU entry is still higher than when Labour first took office. Even Labour voters are split fairly equally between those who support and oppose EMU entry, while more than three-quarters of Conservative voters are against EMU entry.
The coming few months will be crucial to the EMU debate. But, we doubt that the government will give a strong pro-EMU lead while public opinion is strongly against. Partly as a result, we doubt that public opposition to EMU entry will fall enough to tempt the government to call a referendum. Our best guess is that the UK will stay out of EMU until after the next election.
But the likelihood of renewed EMU speculation reinforces our long-term bearish view on long gilts and on sterling versus the euro. We do not believe that the odds of EMU entry are high enough to justify a bullish stance on the UK short end, which in any case looks a bit stretched.
Latest polling conducted between 30 August - 4 September 2001 Sample size 1,983 people for latest survey, and similar for earlier results.
Sources: MORI Financial Services and Schroder Salomon Smith Barney
Figure 1. UK - Balance of Opinion Over EMU, 1991-Sep 2001
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