Euro too weak for Britain - BoE's governor

George warned that Britain would risk economic hardship if it scrapped the pound in favor of the euro at its current rate. Despite its recovery over the last month, the euro has lost about one quarter of its value against the dollar since its launch in January 1999.

Entering at the present exchange rate would put "uncomfortable" expansionary pressures on the British economy. But signs that the euro was recovering made entry more likely, the governor told BBC1's "Breakfast With Frost" program.

He said if Britain had been in at the launch of the euro, the country would have faced a "very strongly expansionary" economy. However, he defended the economic policies followed by countries in the Eurozone, and by the European Central Bank, which sets interest rates in the region. "If you look at the Eurozone in its own terms - actually they have done extremely well, he added.

Eddie George also said that recent signs of economic slowdown in the United States did not constitute a recession and were a good thing for the global system.

"It's a good thing that the US economy is slowing down," George said. "The United States economy had to slow down," he added. "If it hadn't begun to slow down I think we would be looking at a bigger problem...further down the track."

In the latest signs of easing in the US, the unemployment rate edged up to 4% in November from 3.9% the month before and the University of Michigan's consumer sentiment index for December dropped sharply.

That data follows the slowdown in annualised US economic growth to 2.7% in the third quarter from a rampant 5.6% in the second. George said that there was a tendency to exaggerate the significance of the developments. "I'm not greatly concerned that it's excessive at this stage," he said. "We're not in that situation (recession) now."