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EMU `could mean 2p off income tax'

Thursday 31 October 1996 20:02 EST
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The case for entering EMU was backed yesterday by a study by IBCA, the credit rating agency, which said it could pay for 2p off the basic rate of income tax.

Christopher Huhne, managing director of sovereign ratings at IBCA, said most EU countries would make substantial savings in the interest payments on their national debt as a result of the likely fall in bond yields for EMU participants.

Britain could eventually benefit by the equivalent of 0.7 per cent of GDP - the equivalent of 2p off tax - and the gains would be particularly marked for Spain, Portugal and Italy, ranging from 2 per cent to nearly 6 per cent of GDP.

Mr Huhne believed that the independent European System of Central Banks would reduce the likelihood of macro-economic policy instability, and create a low-inflation and low- interest rate environment for European business.

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