sustainable convergence between Britain and the economies of a single currency whether there is sufficient flexibility to cope with economic change; the effect of investment; the impact on our financial services industry; and whether it is good for employment
The Government has said that the Treasury will complete an assessment of the Five Tests within two years of the start of this Parliament (by the summer of 2003).
The assessment has not yet started, but the necessary preliminary analysis - technical work that is necessary to allow us to undertake the assessment within two years as promised - is underway.
On the basis of the assessment, the Government will take a decision on whether the Five Tests have been met. If the Government recommends UK entry, it will be put to a vote in Parliament and then to a referendum of the British people. Government, Parliament and the people must all agree.
The Government launched a draft National Changeover Plan in February 1999. The Plan summarises the work done so far with the public and private sector and the work planned for the future. The Plan shows that the Government is putting its policy of prepare and decide into practice.
The City of London
Although Britain is outside the euro zone the City of London, with its expertise in euro markets, remains the top centre for euro denominated international trading. Since the launch of the euro in 1999, London has established a pre-eminent position in euro-denominated transactions in its international financial markets. A substantial proportion of the euro's 19% share of foreign exchange transactions originates from business conducted in London. London retains its lead in foreign equity trading with 48% of the world market in 2000, and two-thirds of this was in euro zone company stocks. The UK insurance industry was the largest in Europe with £174bn of net premiums generated in 2000. While LIFFE remains the world-centre for euro money market derivatives trading.
Overall the City of London is more than maintaining its lead. It is one of the world's three leading financial centres, along with Tokyo and New York, and it is the worlds leading international financial centre. London is the largest international centre for foreign exchange dealing, with nearly a third of the world market. London also has far more foreign banks (539) than any in other major international centres and the UK has the leading share of cross-border lending (nearly 20% of the world total in March 2001). And there are more foreign companies listed in London than in any other centre, 501 at the end of 2000. Needless to say, London is also by far the largest financial centre in Europe, with none of the other centres even coming close.
To promote and underline the City's place as an important global centre for financial services, the Lord Mayor of the City of London, Sir David Howard, visited Kuala Lumpur in October 2001. The Bank of England's Director for Europe, John Townend, came in January to explain the UK's position on the euro and the City of London's role to financiers.
