Britain has no interest in adopting the euro while it is too weak, the governor of the Bank of England said yesterday.
Sir Eddie George said joining the eurozone at current exchange rates would put pressure on the British economy. On BBC television, he said: "The weakness of the euro is a real complication, because I do not think anybody believes that we could sensibly lock into the euro at the kind of exchange rate we have had over the recent period."
His comments came the same day the European Commission president, Mr Romano Prodi, said the EU's difficulties in reaching a reform compromise package at its Nice summit would not affect the value of the euro.
Asked whether the currency would lose value because the summit had such problems agreeing reforms to prepare it to take in new members, Mr Prodi said: "I don't think so because the European economies are strong. "I don't think the euro depends on the success of today's negotiations," he said. The euro's value would reflect the underlying economic fundamentals "sooner or later", he added.
Mr George said: "If the euro recovers and we have a sustainable [exchange] rate against the euro for sterling, then that tension will go away and then I think the five tests can be applied."
The British government plans to wait for economic conditions to be right in five domains before putting the question of joining the zone to a referendum. A referendum would not take place before the next elections, which should be held by spring 2002.
Mr George said the euro's current weakness was not linked to problems within the euro zone.
"The reason that it has been weak has actually been less to do with what is happening in the euro zone than with the magnetic effect of higher productivity growth and strong economic growth in the United States sucking capital out of the rest of the world," he said.
