If initial euphoria is anything to go by, the successful launch of euro notes and coins may in fact catalyse the United Kigdom’s decision on whether to retain its popular pound sterling or give it up, along with economic sovereignty, in favour of the common currency.

Though arguments have been going on for some time now on the pros and cons of the UK adopting the euro, the ruling Labour Party had made it clear that the final decision would be taken by the people in a referendum which would be called only after it, through economic tests, was determined that such a move would not affect the country.

Proponents of the euro within the government, however, are finding it difficult to desist from taking advantage of what appears to be a seamless transition to a common currency in the 12-member European Union. They have become increasingly vocal in their support for the euro since its launch in the form of notes and coins on January 1.

The Conservative Party, which is opposed to the euro, is angry. The man leading the pro-euro movement is Prime Minister Tony Blair. He has been preparing the people with statements which have now moved from neutral to outright support. “...Euro is now a reality, so I think the idea that we run away from it or hide our heads in the sand and pretend it isn’t there would be foolish. We have got to prepare for it, “ he said last Friday making his first statement after the launch of euro notes and coins.

Peter Hain, minister for Europe, said that embracing the common currency was ‘inevitable’ and even hinted at the possibility of the Chancellor of Exchequer, Gordon Brown, undertaking an early assessment to determine if the UK would be economically protected if it adopts the euro. Mr Brown, though not opposed to the euro, is very cautious. He is clear that economic test is the most crucial element in determining whether the UK opts for the euro. The flurry of statements from the government may not be exactly to his liking.

Mr Blair’s impatience and his Chancellor’s cautiousness are understandable. The former is driven by political consideration. His popularity is at a peak. He has just won a landslide victory and the Afghan crisis has only pushed up his ratings. More importantly, the Opposition, in the form of Conservative party is at its weakest. The general feeling is that if he cannot push the country towards the euro, it may not be possible to adopt the currency for a long time. This is because one in two Britons do not want to give up the pound sterling and only 12 per cent want the euro. They are against any further integration with mainland Europe and do not want to give up economic as well as political sovereignty.

Changing this perception is a tall order and Mr Blair wants to capitalise on his popularity to bring about this change. As far as Mr Brown is concerned, he has to prepare an economic case for supporting the euro. That, indeed, is a difficult task.

The UK economy has consistently outperformed the euro zone despite the latter resorting to a common monetary policy three years ago. Moreover, the euro as a currency has failed to infuse any confidence as it has consistently under-performed the dollar since its launch (as a virtual currency) on January 1, 1999. The sterling, on the other hand, is a very strong currency and economists fear that it will have be devalued if he UK has to adopt the euro at a competitive rate.
This could make imports and travel costly, something that people will not like. Some also argue that the‘ one monetary policy fits all’ theory may not suit the UK as its economy is different from that of other EU nations. Its non-EU trade is large and it still maintains strong commercial links with former colonies. Moreover, it has significantly high housing mortgages and any interest rate decision will have to factor in this feature.

The government therefore has to come out with a clear-cut case explaining how the euro will benefit the people more than sterling. Mr Blair and his pro-euro supporters are hoping that the public view will change once people start experiencing the currency.

Millions travel to mainland Europe every year and will handle the euro. Many stores in the UK are accepting the currency. In fact, there are reports that the euro may become stronger than US dollar later this year, more so on account of slowdown in the US rather than any great performance of the euro zone economy. But anti-euro supporters are unlikely to go down without a fight. Mr Blair may have to use all his popularity and convincing speeches to get the people to give up the pound sterling — provided his Chancellor is convinced that the euro is good for the country.