Britain’s unemployment rate would be twice as high as it is now if former British prime minister Tony Blair had taken Britain into the euro when he was prime minister, a leading think tank said yesterday.
With the problems in Greece calling some commentators to question the wisdom of the European monetary union, the Centre for Economic and Business Research (CEBR) has used its economic model to calculate what might have happened if Blair had signed up to join the euro.
INFLATION
It posits that growth would have been very slightly stronger between 1998 and 2006, but so would have inflation, probably as interest rates would have been kept lower. After 2006, the slump would have been much greater, the CEBR said.
“GDP last year might have fallen by 7 percent instead of 5 percent and unemployment now would be around 15 percent,” it said.
Britain’s internationally comparable International Labour Organization jobless rate fell to 7.8 percent in the three months to November, the first fall in 18 months.
CREDIT FOR GORDON
“[British Prime Minister] Gordon Brown should be given credit for those things he has got right and this is the most important of them,” the CEBR said.
Brown was chancellor of the exchequer between 1997 and 2007 when Blair was prime minister and is widely credited for keeping Britain out of the euro by coming up with the formulation in 1998 that five economic tests had to be met first.
Asked whether the current problems in the euro zone meant he felt vindicated on keeping Britain out of the single currency, Brown said in an interview on Thursday that the UK had more flexibility than other countries by not being in the union.
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