Britain is not a member of the single European currency and will not become one in the foreseeable future. However, it is instructive to recall the economic (convergence) conditions which nations had to meet when joining the single currency. Public debt (the total sum that a nation owes to its creditors) was not to exceed 60% of GDP and the current account deficit (the difference between net expenditure and net receipts) was constrained not to exceed 3% of GDP. These terms were identified by the leaders of the EU as being the necessary level of cohesion required to let a group of disparate economies share a single currency such that the stresses within the different economic speeds would not cause the engine to seize.
In common with large tracts of the world, the British government was forced to borrow heavily to stave of the worst excesses of the Global Financial Crisis, causing its deficit to rise strongly. In common with Eurozone economies and many other around the world, the UK has pledged to get its (new) borrowing under control and seeks to operate a balance of payments surplus by 2017-18 (my word! A flying pig…). In its most recent statement on the matter, the Office for Budget Responsibility (OBR) suggests that the current full year deficit (to April) will come in at £107.8 billion. This is a reduction of £7.3 billion on last year’s figure and excludes government windfalls from Bank of England’s QE gains and also the financial burden of absorbing Royal Mail’s pension scheme prior to the firm’s privatisation.
With respect to the UK’s public debt, the sum now stands at a shade under 76% of the nation’s GDP, or £1.16 trillion. The public deficit stands is projected to come in at 5.9% - meaning that even if the UK wanted to join the Euro, it could not currently meet the convergence criteria for membership.