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Osborne in euro attack on Labour Osborne in euro attack on Labour
(about 10 hours later)
George Osborne is to attack Labour's "euro-fanatics" following speculation that senior government figures have talked of joining the single currency. George Osborne has criticised Labour's "euro-fanatics" following speculation that senior politicians have talked of joining the single currency.
European Commission boss Jose Manuel Barroso caused a stir after saying recently that he believed the UK was "closer than ever" to joining the euro. European Commission boss Jose Manuel Barroso said the UK was "closer than ever" to joining the euro.
Senior ministers have denied this, saying it is not being considered. In a speech the shadow chancellor said euro supporters had "seized on economic difficulties for political ends".
In a speech later Mr Osborne will say euro supporters had "seized on economic difficulties for political ends". But Europe minister Caroline Flint said that was "nonsense" and there were "no plans for Britain to join the euro".
'Wrong solution''Wrong solution'
Scrapping the pound will make the UK's economic problems worse not better, the shadow chancellor will argue in a speech to business leaders in the north east of England. In a speech to business leaders in the north east of England, Mr Osborne said scrapping the pound would make the UK's economic problems worse not better.
Referring to the debate about the UK joining the euro in an interview with French radio, Mr Barroso said "the people who matter in Britain are currently thinking about it". In a recent interview with French radio Mr Barroso said "the people who matter in Britain are currently thinking about it".
The move is now seen as more attractive because of the effects of the global credit crunch, he claimed, adding that "some British politicians have already told me, 'if we had the euro, we would have been better off'." The move was now more attractive because of the effects of the global credit crunch, he claimed, adding that "some British politicians have already told me, 'if we had the euro, we would have been better off'."
Our deteriorating position is not a good reason to join the euro George Osborne It didn't take long for the euro-fanatics in the Labour party to seize on our economic difficulties for their own political ends George OsborneShadow chancellor
Business Secretary Lord Mandelson told the BBC on Wednesday Mr Barroso was not referring to him and he could not remember having a recent conversation with him about UK entry to the euro.
But he added: "My view is that the government is right to maintain a long-term policy objective of taking Britain into the euro, but it's not for now."
In his speech, Mr Osborne said: "It didn't take long for the euro-fanatics in the Labour party to seize on our economic difficulties for their own political ends.
"It's true that our economy is doing worse than the rest of Europe. But our deteriorating economic performance is not a good reason to join the euro. "
'Wrong solution'
The value of sterling compared with other currencies has fallen during the credit crunch, and the UK government has had to spend massively in recent months to try to support the economy.The value of sterling compared with other currencies has fallen during the credit crunch, and the UK government has had to spend massively in recent months to try to support the economy.
But Mr Osborne will say this is precisely one of the reasons the UK should not countenance the euro. Mr Osborne said: "The dramatic fall in the value of the pound over the last few months has led some to conclude that the answer is to abandon it [the pound] altogether," he said.
"The dramatic fall in the value of the pound over the last few months has led some to conclude that the answer is to abandon it [the pound] altogether," he will say. "That is exactly the wrong solution. Sterling's decline is the result of a damning verdict from international markets on British economic policy.
"That is exactly the wrong solution. Sterling's decline is the result of a damning verdict from international markets on British economic policy. The solution is better policy to restore confidence in Britain's long-term prospects." George Osborne is shoring up his own standing in the Conservative party by synthetic outrage over a non-story Caroline FlintEurope minister
He will add: "It is true that our economy is doing worse than the rest of Europe. But our deteriorating position is not a good reason to join the euro." "The solution is better policy to restore confidence in Britain's long-term prospects."
Senior Labour figures have distanced themselves from Mr Barroso's comments, saying the government's policy - that the UK has no plans to join - has not changed. Europe Minister Ms Flint said there were "no plans" for Britain to join the euro and Mr Osborne's comments reflected the Conservative "obsession" with Europe, while most people were concerned about the economy.
Speaking on BBC's Question Time programme on Thursday, health secretary Alan Johnson said "now is not the right time to join the euro". She added: "David Cameron promised to stop 'banging on about Europe' but because of his misjudgements on the economy George Osborne is shoring up his own standing in the Conservative party by synthetic outrage over a non-story."
He said such a step would require a huge national debate and that everyone was "focused" at the moment on getting through the current economic difficulties.
Business secretary Lord Mandelson has said he still favours eventual UK entry but the move is not right now.
Five tests
In 1997 Gordon Brown, seen as less keen on the euro than Tony Blair, set five economic tests which had to be met before ministers would recommend UK euro entry and holding a referendum.In 1997 Gordon Brown, seen as less keen on the euro than Tony Blair, set five economic tests which had to be met before ministers would recommend UK euro entry and holding a referendum.
The key test is whether the UK economy is coming together with those of countries in the eurozone and whether this can be sustained in the long-term. The second test, linked to this, is whether there is sufficient flexibility to cope with economic change.The key test is whether the UK economy is coming together with those of countries in the eurozone and whether this can be sustained in the long-term. The second test, linked to this, is whether there is sufficient flexibility to cope with economic change.
The remaining three tests assess the impact of joining the euro on jobs, foreign investment and the financial services industry.The remaining three tests assess the impact of joining the euro on jobs, foreign investment and the financial services industry.
Opinion polls have suggested that any vote on scrapping the pound and adopting the euro would be lost, and in the UK the currency has not been a significant political issue for years.Opinion polls have suggested that any vote on scrapping the pound and adopting the euro would be lost, and in the UK the currency has not been a significant political issue for years.