Sunday

29th Jan 2023

Prominent economists question the five economic tests

Leading British and international economists, including three Nobel-prize winners have questioned the importance of the five economic tests, saying that the decision whether Britain should join the eurozone would be rather based on political rather than economic factors.

In a Financial Times survey the economists say that the case for entry must be "clear and unambiguous", however they believe this would be impossible using these five economic tests. The economists include: professor Gary Becker, University of Chicago, Sir Alan Budd, provost of Queen's College, Professor George Akerlof at the University of California and Martin Weale, director of National Institute of Economic and Social Research.

Tests are vague and laughably inadequate

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"Gordon Brown's five tests do not flow clearly from any coherent vision of how the economy works and cannot possibly lead to clear and unambiguous conclusions as to when or whether the UK should join the monetary union," said Wynne Godley from Judge Institute of Management at King's College. These tests are vague and laughably inadequate, given the importance and complexity of what is at issue, he added.

"There is no purely scientific way of concluding that Britain's entry . . . . would or would not unambiguously benefit Britain, the other euro countries or the world as a whole," said Robert Mundell, professor of economics at Columbia University in New York and winner of the 1999 Nobel prize for economics.

Also a senior British trade union leader Bill Morris, the general secretary of the Transport and General Workers' Union spoke strongly against the euro membership in his new year message. Mr Morris said that the euro could jeopardise investment in public services and Britain should not join the single currency even if the five economic tests are met.

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