Euro 'has cost British families £350'

THE EURO has cost the average British family £350 since it was launched, a City report claims today. The study says that expense comes from the damage caused to British business and exports by Germany's single currency crisis.

Over the past three years, the German problems have squeezed Britain's national income by £9.1bn - or £350 per household.

The report, released today by City accountants Numerica, estimates that the national income shrinks by around 0.5% for every 1% fall in Germany. It says the problem has been created by the 'one-size-fits-all' interest rates that have been imposed on the 12 member countries of the euro.

It claims those interest rates - set by the European Central Bank for the whole euro-zone - have consistently been too high for the German economy. In 2002, for example, the rate should have been nearly 2% lower to boost economic growth.

These higher interest rates have hurt British exports, but they have also indirectly affected our exports to scores of other countries which have suffered plummeting trade with Germany.

The findings are expected to fuel public scepticism about British entry to the single currency. It also underlines concerns about the impact of blanket interest rates on the local economy if Britain joins the euro.

Opponents claim it would be disastrous for Britain if Labour surrendered the Bank of England's power to set our interest rates to the ECB, which is based in Frankfurt.

Numerica's head of economics, Maurice Fitzpatrick, said there had been widespread concern about the negative impact the euro has had on Germany.

'The revelation that the German euro effect has already led to lost UK output - lost income - equivalent to some £350 per UK household on average will do nothing to promote the popularity of the euro in the UK,' he said.

'We very much hope that the German economy can be revived as soon as possible in order to put this unfortunate German euro effect to an end, although it is currently hard to see how this would occur.'