The European Monetary Union and the Euro

The Government's Policy

The Government's policy on membership of the single currency remains as set out by the Chancellor of the Exchequer in October 1997, and restated by the Prime Minister in February 1999.

In principle, the Government is in favour of UK membership of the European Monetary Union; in practice, the economic conditions must be right. The determining factor underpinning any Government decision on membership of the single currency is the national economic interest and whether the economic case for joining is clear and unambiguous. If it is, there is no constitutional bar to joining.

In October 1997 the Chancellor of the Exchequer stated that Five Economic Tests will define whether a clear and unambiguous case can be made. The Five Tests are:

• Sustainable convergence between Britain and the economies of a single currency;
• Whether there is sufficient flexibility to cope with economic change;
• The effect on investment;
• The impact on our financial services industry; and
• Whether it is good for employment.

Full details on the Government's position and further documentation and links relating to the economic tests can be found at www.hm-treasury.gov.uk