Tory strongman says abandon pound despite bleak euro prospects

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Photo - Charles Morgan

United Kingdom’s adoption of euroas a member of the European Union has always been a controversial issue. Amid worsening eurozone sovereign debt crisis, talk of Britain joining the monetary union has almost died down.

However, Lord Heseltine’s latest announcement about the adoption of euro has sent foreign exchange markets jittery. The former deputy prime minister and a long-time supporter of single European currency revealed public had “no idea” about the potential impact of euro’s collapse and its consequences on the British economy.

Speaking to the BBC’s Politics Show, the Tory strongman said:”I think we will join the euro.

“I think the chances are the euro will survive because the determination, particularly of the French and the Germans, is to maintain the coherence that they have created in Europe.”

The comments have deepened the divisions within the ruling party over European Union and adopting the euro. Prime Minister David Cameron failed to win support for his European policies within Conservative ranks, with more than 80 MPs defying the government and calling for a referendum on EU membership. Both the coalition and the Labour Party are against adopting the euro any time soon.

On BBC TVs political show Tory Grandee Michael Heseltine, pointed towards Britains future in joining the single currency.

He highlighted that European banks owe British banks large sums of money, which means that if they collapse it will have disastrous repercussions.

“Now they have got a hell of a problem, let’s be frank about it, but my guess is that they will find a way through.

“I hope they will because the downside for the British economy of the euro going under is catastrophic.

Heseltines comments came just days after German Finance Minister Wolfgang Schauble projected worry over the pound.

German finance minister said the UK will have to abandon the pound and join the single currency faster than people think, taking many British euro-skeptics by surprise.

Analysts maintain that the euro will endure the ongoing turbulence and stabilize, thus convincing non members to join the common currency club.

During former Prime Minister Tony Blairs reign, Britain set five economic tests it must pass before joining the Euro. After meeting those five economic tests, then government also declared it will also have to meet the EUs Maastricht economic criteria before adopting the euro. The third tier of the self-approved procedure before joining the eurozone also involved nod by the cabinet, the houses of parliament, and the electorate in a referendum.

Gordon Brown, Tony Blair’s successor, ruled out euro membership in 2007 saying economic conditions are not favourable for Britain at that time.

In a February 2005 poll, 55 per cent British citizens were against adopting the currency with 30 per cent in favour. The idea of replacing the pound with euro has been a controversial issue with the British public, partly because of the pounds identity as a symbol of British sovereignty. Critics also insist that euro will harm the British economy by having a direct impact on interest rates.

Sources: BBC, Telegraph, Voice of Russia

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