The Chancellor will refresh his verdict on the economic case for EMU entry in the Budget. We expect him again to rule out EMU entry, although doubtless with some sugar-coated language about gradual convergence.
The gap in economic growth between the UK and euro area is the widest since 1995, and our latest MORI poll suggests that public opinion remains heavily against EMU entry. The Chancellor is unlikely to introduce any serious measures aimed at creating sustained convergence in the future.
The UK probably will stay out of EMU for at least the next five years. As a result, the UK's economic out performance versus the euro area will continue to drive interest differentials wider.
Figure 1. UK -- Attitudes to EMU Entry (Question is "If the Government were to strongly urge that Britain should be part of a single European currency, how would you vote?"), 1997-Feb 2004
- Economic & Market Analysis - Sterling Weekly [pdf format - 152K]
1,959 people were interviewed between 19-25 February 2004 by MORI Financial Services.
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