The British government's five tests:
- Sustainable convergence between Britain and the economies of countries that have already adopted the euro;
- Sufficient flexibility to cope with economic change;
- No adverse impact on the UK's financial services industry; and
- Membership must be good for employment.
Only the financial services test has been met, according to the government, and so a series of measures aimed at achieving the remaining tests is to be implemented. These include:
- A change to the Bank of England's inflation target, which from the next pre-budget report this autumn will be based on the consumer price-based inflation index used in the eurozone, rather than the retail price index used in the UK.
- Interim reports to be published by the time of the pre-budget report on changes in the planning and supply of housing and the market for long-term fixed-rate mortgages.
- A new system of fiscal reporting to parliament within EMU.
- The introduction by next year of a regional or local pay dimension to almost all public sector pay deals.
- Six-monthly Treasury reports on trends and progress in flexibility in labour, product and capital markets.
- Continued efforts to achieve reform of the eurozone Stability and Growth Pact and European Central Bank.
- The publication this autumn of a draft referendum bill. This would not be put through parliament until after a positive assessment of the economic tests has been made.
- The introduction of paving legislation allowing government departments to spend money on preparations for possible euro entry.
- The publication today of a British National Changeover Plan setting out a timetable for possible entry by autumn 2004 at the earliest.
- A proposal for Scottish, Welsh and Northern Irish euro preparation committees.
- A call for representatives from consumer organisations, local authorities, the voluntary sector and regional development agencies to join the standing committee on Euro Preparations.
- The publication this autumn of a detailed report on euro preparations within government and the public sector.
- Guidance to local authorities on euro preparations, to be issued shortly.
- A "period of information and discussion" in every constituency in the country.