Pound to euro exchange rate continues to climb
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Tony Blair became prime minister in May 1997 and vowed to put the UK “at the heart of Europe”. The Labour leader was keen for Britain to come more closely integrated with Europe and pledged to hold a referendum on joining the euro if the Treasury found in favour of such a move. However, despite the prime minister’s best efforts, Chancellor Gordon Brown firmly ruled out the UK joining the euro.
Yet despite being told joining the euro was a no-go, Mr Blair continued to prepare to adopt the EU’s official currency.
On June 9, 2003 the Chancellor ruled out Britain’s entry into the single currency.
In what he described as “one of the most momentous economic decisions our country has to take,” Mr Brown said only one of five economic tests on euro membership had been met.
The Chancellor’s five economic tests covered the degree of convergence of the UK and eurozone economies, the flexibility to cope with shocks, the effect on UK growth and jobs of euro entry, the effect on financial services and the effect on inward investment.
He told the House of Commons: “If we enter (the euro) with the tests not met, with the wrong exchange rate, then just as with the European Exchange Rate Mechanism, we could see unemployment rise, public service investment fall, and growth stall.
“The discipline of the five tests is to ensure there will be no repeat of the experience when Britain joined at the wrong rate, at the wrong time.”
But despite these findings, the prime minister continued to make preparations for the UK to adopt the euro.
Indeed it wasn’t until 2010 that Mr Blair’s euro team was finally disbanded.
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The revelations have been uncovered by the late Jeremy Heywood, who served as economic and domestic policy to Mr Blair from 1997-98, before being promoted to Principal Private Secretary to the prime minister in 1999.
Although he passed away in October 2018, his wife Suzanne Heywood has recently published a record of his career in the book: ‘What Does Jeremy Think? Jeremy Heywood and the Making of Modern Britain’.
In the book, the authors writes: “Jeremy thought that, after the euro decision was announced on 9 June that would be the end of it, at least for a while.
“But he was wrong, because many in Number 10 were keen to keep the euro dream alive.
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“A new ministerial group chaired by Tony Blair was set up to oversee the government’s pro-Europe campaign strategy and preparations for the UK’s entry into the single currency, while the Cabinet Office started work on a referendum bill. “
But Ms Heywood said from July it was clear there was little backing for the UK to adopt the currency and so much of the work was put on hold.
However she added: “Even so, it was not until 2010 that another Chancellor at last stood down the final remaining member of the euro preparation team in the Treasury.”
Within the book the euro decision is heavily discussed and reveals the frequent spats between Mr Blair and his Chancellor.
For example, Ms Heywood highlights the prime minister’s frustrations over how long the Treasury was taking to finalise the euro decision.
She wrote: “By early 2001, with the Treasury still stalling, the Prime Minister decided he’d waited long enough, so in answer to a question from the Leader of the Opposition in the House of Commons, he declared that a decision on the euro would be taken within two years.
“The Treasury was furious about this, though there was little they could do once the statement had been made.”
Reflecting on the relationship between Mr Blair and Mr Brown Ms Heywood told Express.co.uk the ongoing conflict between the pair “definitely made it more difficult to get things done”.
But she did concede Jeremy and other colleagues often “found solutions and ways around it” to ensure their disagreements didn’t seriously affect policy.
‘What Does Jeremy Think? Jeremy Heywood and the Making of Modern Britain’ (Harper Collins, £25) by Suzanne Heywood is out now.
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