Unemployment would be 'twice as high if UK was in euro'

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The Centre for Economic and Business Research has calculated what might have happened if Mr Blair had signed up to the euro as prime minister, with the fiscal crisis in Greece calling commentators to question the wisdom of the EU monetary union.

It said growth would have been slightly stronger between 1998 and 2006, although inflation would have been up as well, probably as interest rates would have been kept lower.

After 2006 the slump would have been much greater, the CEBR believes. "GDP last year might have fallen by seven per cent instead of five percent and unemployment now would be around 15 per cent," it said.

Britain's internationally comparable ILO jobless rate fell to 7.8 per cent in the three months to November, the first drop in 18 months.

"Gordon Brown should be given credit for those things he has got right and this is the most important of them," said the CEBR.

Mr Brown kept Britain out of the euro as Chancellor through his five economic tests in 1998 which he said would have to be met before the country could join the single currency.

Asked whether the problems in the eurozone meant he felt vindicated on keeping Britain out of the single currency, the Prime Minister said last week that the UK had more flexibility than other countries by not being in the union.