Sterling will have to depreciate substantially against the euro if Britain is to adopt the single currency, according to Royal Bank of Scotland chief economist, Mr Jeremy Peat.

Speaking in Dublin yesterday, Mr Peat said there are many valuable lessons Britain can learn from the success of the Irish economy and that negative comment in the British press has been overstated.

"The UK press has been painting up inflationary risks and overheating in the Irish housing market. The Irish economy will have to get growth down towards a sustainable trend and the Government needs to work on sustainable economic policies all of the time." Events such as the EU censuring of the Irish Government and the British Prime Minister's comments on Britain's accession to the euro have added a distinct edge to the level of interest in what has been going on in the Irish economy, according to Mr Peat. Mr Blair has now stated that a decision on UK entry will be taken within two years of the pending general election. "The timetable implied by this statement should have come as little surprise, but its rare clarity will increasingly focus minds on the economic aspects of the UK and euro debate."

Referring to the criticism of the Irish and UK governments by the EU, Mr Peat said this outcome does not limit the scope for independence on fiscal policy. "Nor do these events imply any move towards harmonisation of taxes, where Ireland has set valuable precedents or any other outcomes that would limit the scope for adjustments by individual nations within the context of EMU." Inflationary pressures in Ireland have been raised by some as a cause for concern in the context of the possible entry of the UK to the euro but Mr Peat said many of the factors influencing Irish inflation have nothing to do with its entry to the euro.