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New MORI Poll on EMU Membership: Respondents expect - by 52:34% - British euro usage in 2005

05 July 2001, 10:42 CET


GrahamBishop.com's latest Report on "Britain and €uroland" analyses the response to our MORI opinion poll about the likelihood of euro usage in the UK. We have turned this into a good proxy for a referendum by broadening our questions to ask the reasons why respondents might change their attitude towards EMU membership.

Key Points are:

MORI respondents expect – by 52:34% - British euro usage in 2005

Our broad poll may be the best proxy for a referendum - until the event itself. Expectations about British euro usage 2005 have reversed since last September, and respondents now expect it in 2010 by an astonishing 6:1. Having lost the "Save the Pound" Election, even Tory supporters expect euro usage in 2005 by 45:42%; with a 4:1 expectation for 2010 usage.

The "Wavering-antis" Biggest Concern is Loss of Jobs and Trade

Those opponents of EMU prepared to change their mind - "wavering antis" - solely because of this fear are virtually enough to swing the result. Younger voters are least likely to vote and are the most "wavering-anti" – so a key battleground. The gap between firm EMU supporters and those expecting euro usage in 2005 (whatever their personal opinion) is equivalent to over 60% of the wavering-antis.

"Divergence Index": Britain close to France/Germany by 2002

Our projection of the Treasury's quantitative analysis shows that the UK's Divergence has already fallen from 1997=100 to 22. Extending this to other EU States shows that the UK was the third most divergent State in 1997 but is already in the middle - and is likely to stay there while the Treasury makes its Assessment in the next two years.

UK Press Coverage of EU/EMU soared – and became more negative

The Election focussed on issues other than EMU and our unique Press monitor showed that coverage volume did not even reach the levels during the Nice Summit. But the balance became increasingly negative – especially when weighted by readership. This balance tracks the €/$ exchange rate remarkably.

Financial Markets Expectations for EMU Membership have receded

The Prime Minister's FT interview on "winning a referendum" sent 10 year forward - 10 year Gilt yields heading up towards Bund levels on convergence hopes but these were dashed after the Election and especially after the Chancellor's Mansion House speech. So the "expected convergence" point for 3- month money rates has now slipped to 11 years away. But the "high pound" policy, combined with a large current account deficit and strong public spending, raises the risk of a "Brown Wednesday" - a precipitous and perhaps uncontrollable decline in sterling.

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Graham Bishop
Adviser, European Financial Affairs

E-mail: Graham@grahambishop.com
Tel: 01424 777 123
Fax: 01424 775 693
Mobile: 07785 323 483

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