NATIONAL NEWS: Britain 'could triple its trade with euro-zone' SINGLE CURRENCY STUDY ASSESSES IMPACT OF MEMBERSHIP:
Financial Times, Jun 26, 2000, 375 words

The UK could triple its trade with the euro-zone nations within 30 years if it joined the European single currency, according to a report commissioned by supporters of British membership.

The study by Andrew Rose, professor of macroeconomics at the University of California at Berkeley, published today, is based on his established econometric model of trade patterns within single currency areas.

Professor Rose was commissioned by Britain in Europe, the pro-euro campaign group, to assess the impact on UK trade of membership of European monetary union.

He writes: "British entry into Emu could result eventually in a tripling of British trade with euroland.

"If our estimates are accurate, the total increase in British GDP that results from the trade expansion could be substantial" - as much as 20 per cent.

"The reason is that open economies tend to grow more quickly and consequently enjoy higher standards of living."

Admissions of "considerable uncertainty" and lack of "precision" refer to the exactitude of the long-run figures for GDP, and not to his estimate of the boost to trade.

He warns, however, that nothing the size of the euro-zone has been attempted before. "Most currency unions involve small and poor nations. The enormous impact that currency unions seem to have on these nations may thus be much bigger than the effect of Emu on European trade."

He concludes: "Sovereign currencies are important national barriers to trade. The monetary barriers are falling across Europe. The UK should seriously consider whether it wishes to forgo this historic opportunity for an enormously beneficial expansion of its European trade."

Chris Patten, a European commissioner, yesterday attacked Labour's policy on the euro as "a vacuum". Mr Patten called on Tony Blair to address public concerns on the euro head-on.

In an interview on ITV's Jonathan Dimbleby programme, he said: "If you leave a complete vacuum now, it is not filled by the rational and well-intentioned. It is to some extent filled by the extremely hostile."

He said it was "extremely difficult to throw a fire blanket over arguments which go right to the heart of people's concerns and the political debate".

Last weekend, Mr Blair attempted to put an end to divisions among his cabinet colleagues on the government's euro strategy.

However, according to MORI poll in the News of the World yesterday, 78 per cent of voters believe the government is still split.

Mr Blair travels to Berlin this week to meet Gerhard Schroder, the German chancellor. He is set to voice his opposition to plans for a "two-speed Europe". EU future, page 6

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