THE TELEGRAPH: The European Central Bank has deemed Britain unfit for monetary union even if it wants to join following the dramatic slide in sterling and the explosion in the UK budget deficit.
"Great Britain does not meet the entry criteria for the euro," said Lorenzo Bini Smaghi, the ECB's board member in charge of international affairs.
"The public deficit will rise to around 6pc (of GDP) in 2009 and even higher in 2010. Sterling's exchange rate is not yet sufficiently stable," he told Italy's La Repubblica newspaper.
The entry rules impose a deficit ceiling of 3pc of GDP, two years of currency stability, and a public debt limit of 60pc of GDP. The rules were waived for political reasons to let Italy, Belgium and Greece into EMU, but terms are becoming stricter as the ECB seeks to exclude East European states before they are ready.
If anything, Mr Bini Smaghi may have been too kind to Britain. The Treasury expects the deficit to reach £118bn in the 2009 tax year - almost 8pc of GDP - but there are now fears that this will rise even higher as tax revenues collapse. Some analysts have begun to warn that Britain will soon face a deficit of 10pc, the sort of catastrophic levels seen in Latin America in the 1980s. >>> By Ambrose Evans-Pritchard | Thursday, January 8, 2009
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