Is Gordon Brown about to announce that the UK is ready to join the single currency, the five economic tests having been passed?

There are rumours that Gordon Brown is considering signing the UK up to the Euro in the very near future so as to remove any chance of an incoming Conservative government calling a referendum on any aspect of EU membership.

The electorate have always been promised that there would be a referendum before any entry into the Euro, but we were promised a referendum on the EU Constitution and you know how that was side-stepped.

Currently the Government's Euro Assessment website shows the famous "five economic tests" and the results of the 2003 assessment. To remind you, the five economic tests are/were:
"1. Are business cycles and economic structures compatible so that we and others could live comfortably with euro interest rates on a permanent basis?
2. If problems emerge is there sufficient flexibility to deal with them?
3. Would joining EMU create better conditions for firms making long-term decisions to invest in Britain?
4. What impact would entry into EMU have on the competitive position of the UK's financial services industry, particularly the City's wholesale markets?
5. In summary, will joining EMU promote higher growth, stability and a lasting increase in jobs?"

The "five economic tests" were in fact just the most publicised of the four key building blocks that this Labour government declared in 1997 would decide when the Labour Government, who had already committed the UK to the principle of joining the single currency, would actually join the Euro.

The four key building blocks are/were:

"1. a successful single currency within a single European market would in principle be of benefit to Europe and to the UK: in terms of trade, transparency of costs and currency stability
2. the constitutional issue is a factor in the UK's decision but it is not an overriding one, so long as membership is in the national interest, the case is clear and unambiguous and there is popular consent
3. the basis for the decision as to whether there is a clear and unambiguous economic case for membership is the Treasury's comprehensive and rigorous assessment of the five economic tests
4. whenever the decision to enter is taken by the Government, it should be put to a referendum of the British people."

Reading the 2003 report it is incredible how wrong the Labour government was then about the economic prospects of the UK. Here's a few examples:

"The Government is committed to building on the platform of stability and has announced a wide-ranging forward-looking policy agenda to deliver high levels of output and employment. This will help to make the economy more convergent with the euro area for the future. "

Gordon Brown has managed to make the UK and the Eurozone converge in one key way; Sterling and the Euro are nearing parity.

" What impact would entry into EMU have on the competitive position of the UK's financial services industry, particularly the City's wholesale markets?

Over the four years since the start of EMU, the UK has attracted a significant level of wholesale financial services business. The strength of the City in international wholesale financial services activity should mean that it continues to do so, whether inside or outside EMU. EMU entry should enhance the already strong competitive position of the UK's wholesale financial services sector by offering some additional benefits. Again, while the UK's retail financial services sector should remain competitive either inside or outside the euro area, entry would offer greater potential to compete and capture the effects of greater EU integration that would arise from the single currency and other efforts to complete the Single Market, in particular the Financial Services Action Plan (FSAP) - benefits which are postponed while the UK is not in EMU. Overall, the financial services test is met."

Do I really need to "fisk" this one?

Fancy a laugh? OK try this extract (my emphasis):

"Enhancing stability and flexibility: housing

* To deliver a more settled platform of stability in the future and a higher degree of convergence, the Government is committed to a comprehensive programme to improve the functioning of the housing market. Building on the reforms to deliver a step change in planning policy, the Government is undertaking further significant changes in the planning system, supply of housing and housing finance to tackle market failures, increase the responsiveness of supply to demand and reduce national and regional price volatility. These measures are beneficial in their own right to improve the stability and flexibility of the UK housing market and wider economy, but will also increase the housing market's compatibility with the euro area, encouraging greater convergence over time.

* This means implementing quickly and decisively past reforms to housing supply and going further to address both supply and demand in the housing market and macroeconomic stabilisation more generally:
o
o on the supply side, the Government is requiring new Regional Spatial Strategies to take account of volatility in the housing market and promote macroeconomic stability as part of delivering sustainable development; tough and credible measures, including intervention, where local authorities are not delivering housing numbers in high demand areas; and exploring whether, in the medium term, achieving the Government's objectives will require a system of binding local plans. The Government has also commissioned a review of issues affecting the elasticity of supply in the UK, in particular to look at the role of competition, capacity and the financing of the house building industry and possible fiscal instruments, and the interaction of these with the planning system and sustainable development objectives;

o on the demand side, through a review of the UK mortgage market to establish why the share of fixed rate mortgages is so low in the UK compared to many other EU countries and to identify ways of encouraging the market for longer-term fixed rate mortgages; and

o at the macroeconomic level, given that housing is identified as a significant risk factor to the achievement of sustainable and durable convergence and, in the context of the Treasury discussion paper Fiscal stabilisation and EMU, to consider what additional reforms and measures might help deliver wider stability in the economy, including with reference to the housing market, to create the right conditions for convergence within EMU. The Government's announcement of its intention in the next Pre-Budget Report to give the Bank of England a symmetric inflation target as measured by the Harmonised Index of Consumer Prices will help ensure inflation expectations in the UK remain in line with those of the euro area."

I wonder when the next formal assessment of the "five economic tests" will take place and what the results would be? Or will parity between Sterling and the Euro be taken as the excuse for rapid entry into the EU? Could the EU loyal Peter Mandelson and Gordon Brown deliver such a prize to incoming EU President Tony Blair, and could it be before the general election?