Are business cycles and economic structures compatible so that we and others could live comfortably with euro interest rates on a permanent basis?
If problems emerge is there sufficient flexibility to deal with them?
and he correctly determined that neither test was passed.
Current events prove him right. Britain, with its property-speculating populace and large international financial sector has been hit hard by the crash, and this has produced a large fall in Sterling, leading to the market pushing towards the structural changes that are needed.
Even the EU agrees:
One senior EU policymaker told the FT that, in his view, the UK was in breach of article 124.
Brian Lenihan, the Irish finance minister, in January directly accused the UK of running a policy of “competitive devaluation”, putting other countries under “immense pressure”.
Apart from the fact it’s not a “policy” – Gordon couldn’t prop the pound up if he wanted to, and a good thing too – it’s dead right. Britain is benefiting enormously from not being in the Euro, for exactly the reasons Gordon gave when he chose not to go into the Euro. He was right, and those that said Britain would be better off in the Euro were wrong, and even the EU itself now admits it (and is trying to nullify the benefit to Britain by other means).