Euro entry could boost wealth of families by £500 a year

Membership of the European single currency could leave the average British family £500 a year better off, a report published today says.

The analysis for the accountancy group Tenon predicts British gross domestic product (GDP) would grow by more than 1 per cent during the first five years in the euro. It calculates that the higher GDP would boost the country's wealth by £12.5bn a year, equivalent to £500 per household.

The research will be seized on by pro-euro groups, which plan to make the direct financial benefit to individuals the central theme of a referendum campaign on joining the euro.

Maurice Fitzpatrick, Tenon's head of economics, said: "This demonstrates the potential for UK membership of the euro to increase the living standards of every UK household, providing of course we join when the conditions are right.

"The prosperity of each household must be determined by how large the national cake is. If it is larger, then in one way or another that will filter down."

He said the calculations were far more significant than the argument advanced by the minister for Europe, Peter Hain, that growing familiarity with euro notes and coins, introduced this year in 12 EU countries, will win over sceptics.

"It seems strange that organisations and parties who are campaigning in favour of joining the euro haven't focused on this issue," said Mr Fitzpatrick. "The pro-euro arguments put forward so far by such organisations have been short on hard numbers and long on waffle," he added.

Tenon's forecast is based on the projected rise in GDP that will follow the growth in trade between Britain and other EU countries once the UK joined the new currency. It points to the sharp increases in trade between France and Germany and other EU members since the euro was launched in 1999.

But George Eustice, director of the "no" campaign, said: "This narrow study fails to take into account the damage caused by a 'one size fits all' interest rate. Locking into the euro would lead to greater volatility for the majority of our trade because British exporters use dollars, not euros."

Euro-enthusiasts believe the Chancellor, Gordon Brown, could announce that economic conditions are right as soon as the autumn. A referendum on membership could then take place next May.