Mandelson kickstarts dormant UK euro debate

The UK’s case for staying out of Europe’s single currency “is becoming weaker”, European Trade Commissioner Peter Mandelson has argued in a bid to reopen Britain’s euro debate.

Writing in a new book, 'The City in Europe and the world' published by the European Research Forum, Mandelson insists a decision on UK euro membership will be “critical” over the coming years.

“A critical decision for coming years is whether the UK should join the euro.  This has not gone away as an issue for all time,” he writes.

“The British economy has prospered outside of the single currency but with increasing harmonisation in other areas of financial services, the long term case for staying outside is becoming weaker.”

The European commissioner's comments will be seen as an attempt to keep the UK’s euro option alive at a time of changing government leadership.

The europhile Mandelson is politically close to current British Prime Minister Tony Blair, who is set to stand down sometime in the next four years.

His expected successor is UK finance minister Gordon Brown, whose eurosceptism has been a key factor in keeping Britain outside the euro.

Brown’s hostility to Brussels, his strong political position and the collapse of the EU constitution as seen the demise of the euro debate in the UK.

Mandelson’s comments will be a reminder for the UK’s centre-left Labour government’s pro-EU members not to give up the fight for euro membership in the period ahead.

His case will be boosted by forecasts predicting eurozone economic growth could outstrip the UK in 2006 – weakening one of Brown’s arguments against the single currency.

Mandelson argues that the “prosperity of the British economy is directly connected to the rest of Europe” – a line that has become more persuasive as euro growth increases and Brown’s national budget deficits swell.

The European Commission will next week admonish Brown over his failure to keep UK borrowing under control.

“The reason that the EU matters to Britain generally, and the City more specifically, is that the continent's economic success or failure contributes directly to Britain's economic success or failure,” Mandelson writes.

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