Brown 'foresees 30% devaluation' for sterling to join euro
The Treasury is moving to counter reports the Chancellor has decided the pound would have to lose 30% in order to join the euro.
The Business newspaper quoted 'senior Treasury sources' saying Gordon Brown believes devaluation would be necessary for successful euro entry.
It claims Mr Brown and his advisers believe it would be too risky deliberately to engineer such a fall, and have ruled out attempting it.
The Business quoted a source as saying: "We could lose control of the process and get a much bigger devaluation than we had bargained for. Even a 30% cut in the exchange rate would risk reigniting inflation."
But the Treasury insists policy on the euro had not changed.
The decision on whether it would be advantageous for Britain to join the euro would be based on the five economic tests set out by the Chancellor in October 1997, said a spokesman.
Commentators have long suggested that the value of sterling would effectively be a "sixth test" which must be passed before Mr Brown could recommend euro entry.
