UK inching closer to adopting euro, says EC chief Barroso

The financial crisis, house price crash and a recession are impacting growth in the UK, which is forcing British politicians to consider joining the eurozone.

According to the president of the European Commission, Jose Manuel Barroso, the UK is "closer than ever before" to joining the euro.

The effect of the global credit crunch has led British politicians to consider favouring the euro, he said while speaking on a French radio show.

Speaking on a French radio show Barroso further said that a majority of the British were opposed joining the eurozone, even though the euro had become a far more attractive option after the recent economic uncertainty, that has led to the value of the sterling having fallen compared to other currencies with the UK government having to spend massively in recent months to prop up the economy .

However, the British goverment maintains that it's stand on the euro remains unchanged.

Barroso also said the situation in Denmark, an EU state that had voted against joining the eurozone in 2000, is now planning to hold a new referendum on adopting the euro as its currency.

During his radio interview, Barroso also said that he expected the European Central Bank (ECB) to cut interest rates during the course of the next week.

However, Jean-Claude Trichet, President of the the european Central Bank,  says that the bank could consider a rate cut provided there is evidence that inflationary pressures had eased.

The European Union has called for a €200-billion boost across Europe to help stimulate an economic recovery.

With the UK's economy doing well in the past 10 years, the country could afford to stay out of the eurozone membership as the tangible economic benefits of an independent monetary policy outweighing the much lower tangible benefits of membership.

The real interest rate gap with the eurozone will rise. It will benefit in terms of long-term economic costs.

The UK is already suffering from rapid fall in house prices that is expected to last for quite some time. Secondly, UK households have high levels of indebtedness. Thirdly, the credit crisis has damaged the financial sector and the credit supply mechanism. Fourthly, UK depends heavily on the now contracting financial sector for supply of well-paid jobs.

Moreover, the UK's macroeconomic policy framework may simply not survive the financial crisis. In the future there will be more economic governance at eurozone level.

Sooner that later the government will have to consider going the euro way given the current economic conditions and recession, even at the cost of nationalist sentiments.