Sweden may hold referendum on euro next year

SWEDEN - Goran Persson, Sweden's prime minister, yesterday indicated he was ready to hold a referendum on euro membership next year.
SWEDEN - Goran Persson, Sweden's prime minister, yesterday indicated he was ready to hold a referendum on euro membership next year.

His remarks, a clear vote of confidence in the single currency just days after the successful introduction of notes and coins, are likely to influence the euro debate in the UK and Denmark.

Mr Persson outlined a timetable for Sweden to join the euro in 2005. He said a referendum was likely to be held next year, at the earliest in the spring. His comments, made in an interview in Dagens Nyheter, Sweden's leading broadsheet newspaper, increased speculation that he is planning a referendum in March 2003.

There has been a dramatic increase in positive sentiment towards the euro in Sweden over the past year. An opinion poll this week suggested 51 per cent of Swedes favour euro entry, with 44 per cent against. A year ago, in the aftermath of Denmark's rejection of the currency, the figure was 64 per cent against and 31 per cent in favour.

Mr Persson said that if a referendum was held next year, Sweden could join the EU's exchange rate mechanism in 2004 and the single currency in 2005. It would pave the way for euro notes and coins in Sweden in 2006.

Per Stig Moller, Denmark's foreign minister, responded by suggesting a new euro referendum could be held there in 2003.

The apparent turnaround in Swedish public opinion on the single currency is likely to hearten Tony Blair, who has stepped up the arguments in favour of euro membership since the launch of notes and coins.

"A Swedish yes vote would be helpful," said a Whitehall official. Some UK ministers favour a referendum in the summer or autumn of 2002.

Another Whitehall official said a Swedish no vote would pose difficulties in Britain because it would undermine the tentative impression that UK membership of the euro was inevitable.

A poll yesterday suggested public scepticism about the euro in Britain is diminishing.

The NOP poll for Channel 4's Powerhouse programme found 51 per cent of people would support euro membership in a referendum in one or two years' time if ministers and business leaders backed it, compared to 42 per cent in February last year.

The Swedish krona rose yesterday in response to the increased likelihood of euro entry, but the pound was broadly unchanged against the euro.

Danny Gabay of JP Morgan argued that the growing likelihood of Sweden joining the euro also improved the chances of British entry because of the effect on public opinion. "The Swedish decision will be at least as important for Britain as Denmark's no vote was for Sweden in 2000," he said. "If Sweden votes yes next year, it would expose Britain as the only major economy in the EU to remain outside the euro."

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