MercoPress. South Atlantic News Agency

Think tank praises UK for not having joined the Euro

Gordon Brown’s five economic tests ensured flexibility

Britain's unemployment rate would be twice as high and the recession would have been even deeper if we had joined the euro, a think tank has claimed.

As the Euro-zone countries grapple with the problem of Greek debt, the Centre for Economic and Business Research (CEBR) used its economic model to calculate what might have happened if the UK had signed up to the single currency. And it suggests that while growth between 1998 and 2006 may have been slightly stronger, the economic slump would have been more devastating.

“GDP last year might have fallen by 7% instead of 5% and unemployment now would be around 15%,” the CEBR said.

Britain's internationally comparable unemployment rate fell to 7.8% in the three months to November, the first fall in 18 months. However, the CEBR's shocking predictions were dismissed as being “almost meaningless” by Brendan Donnelly, a former MEP and the director of the Federal Trust think tank.

“It's impossible to look backwards and change just one of the variables,” he told Sky News Online.

“If we had joined the Euro, we would have had a different economic policy back then, and we would have had a different one since.” He went on: “In many ways, the position of the UK is not so different to that of Greece. We have large public deficit that we don't look like paying back any time soon.

”Greece has found it advantageous to join the Euro. What's to say we won't look back in a couple of years' time and conclude it would have been advantageous for us to join, too?“

Mr Brown is widely believed to have been behind Britain's decision to stay out of the Euro as in 1998, when he was Chancellor he introduced five economic tests that had to be met first.

”Gordon Brown should be given credit for those things he has got right and this is the most important of them,” the CEBR said.

Last week, the Prime Minister said the UK had retained more flexibility than other countries when he was asked whether he felt vindicated over his decision not to join the Euro in light of the crisis in Greece.