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Business

Head of EU economic affairs sees Britain joining euro

Latest update : 2009-02-03

Joaquin Almunia, European Union Economic and Monetary Policy Affairs Commissioner, believes Britain is very likely to join the euro currency. A majority of Britons, 71 percent, are against their country joining the euro.

AFP - There is a "very high" chance that Britain will join the euro single currency in the future, European Union Economic and Monetary Policy Affairs Commissioner Joaquin Almunia said Monday in Spain.
  
He added that it was also possible that other EU nations like Denmark and Sweden would join the euro zone, without giving an estimated timeline, and said there was "little chance" that any nation will abandon the single currency.
  
"The possibility that EU member states which are not currently part of the euro zone could meet the conditions to join are very high," he told a business lunch.
  
His comments come at a time when some economists have raised the prospect that some of the 16 nations which currently use the euro may be pushed to abandon the currency to deal with severe economic contractions.
  
Dropping the euro would allow nations to once again devalue their own national currency to boost exports but Almunia warned earlier in an interview with Spanish radio that the cost of making this move would be so high that no nation would do it.
  
The British currency has plunged by some 20 percent against the euro in recent months, prompting a renewed debate over Britain adopting the European single currency.
  
A majority of Britons, 71 percent, are against Britain joining the euro, according to a recent poll of 1,000 people between December 19 and 21.
  
Almunia also said the idea of setting up state-sponsored "bad banks" that buy banks' impaired assets and thereby encourage them to start lending again would be discussed at the next Group of 20 meeting in London.
  
Sweden had successfully used a so-called "bad bank" to refloat its financial system after it was crushed by bad debt in the 1990s, he said.
  
"I think an effective solution would be to find a way to give banks confidence in what their peers have on their balance sheets. We are now talking about bad banks, about taking impaired assets off banks' books," he said.
  
An economic recovery could start at the end of 2009 or early 2010 if all goes well, Almunia added.

Date created : 2009-02-02

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