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Euro aspirations dealt a blow over interest rate vote

The Treasury select committee has dealt a blow to UK Euro aspirations by warning that Bank of England representatives would be excluded from one-fifth of European interest rate votes under proposals currently being considered.

In its report on the UK and Euro published this week, the all-party committee of MPs has said the current plans for European Central Bank interest rate decisions would prove to be “an obstacle to entry”.

Brokers warn that such a move would have worrying effects on the housing market. They say that as UK interest rates determine mortgage rates, this would leave UK mortgage borrowers at the mercy of Europe. They also warn that such an exclusion from interest rate decisions could “inflame” eurosceptics.

Others say, however, that it would not make much difference to the European question, saying that entry would mean buying into the rules and regulations which come with it.

The committee&#39s warning comes as a result of proposals for dealing with expansion of the EU to 25 members from the current 15 in 2004.

They say a separate committee should be established which would see big countries voting in four out of five interest rate decisions at the European Central Bank.

TSC chairman Labour MP John McFall says: “We flagged it up in the report because people who are against entry say this would have negative effects. We are suggesting reform to the ECB voting procedures before UK entry is pursued.”

Prudential Mortgage Club national mortgage manager John Malone says: “It is inevitable at some stage that we will join Europe and we will then have to abide by its rules and regulations. If every other country has to, then it is only fair.”

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