UK warned not to allow euro debate to drift 

Do not let the debate on the euro drift, says director of the Federal Trust Brendan Donnelly during a debate on Britain's future and the euro on 21 July. His advice to the UK government on the Constitution: take a more positive view of what is in it and don't just talk about 'red lines'. In his view, the government will be hard pressed to make the case that what is in the Constitution "will now save the UK from the apparently hideous (but in fact non-existent) menace of a 'European federal superstate'". He adds that, if the case is made along these lines, it will only serve to worry people.

"In a sense, membership of the euro became a proxy for whether Britain really wishes to commit its future wholeheartedly to membership of the EU, or to remain a semi-committed member on the sidelines," says Sir Brian Unwin in his chairman's introduction to the Federal Trust Working Group report 'Britain's future and the euro'.

The report is based on eight driving forces identified by the Federal Trust - the pressures of globalisation, technological advance and innovation, distinctive social preferences in Europe, changing demography and migration, democracy in the EU, the impact of enlargement, macro-economic management and the impact of financial integration.

It examines four different scenarios:

• UK joins a eurozone that is performing well
• UK joins a eurozone that has failed to achieve sustainable growth and welfare
• UK stays out of a eurozone that is performing well
• UK stays out of a eurozone that has failed to achieve sustainable growth and welfare

The comments come as the Commission released an assessment five years on from the launch of the euro. "Measured against the goal of securing macroeconomic stability, the first five years of EMU can be considered a success" although "budgetary developments have been disappointing in terms of securing improvements in the underlying budget position", says the report.