Among the greatest concerns for Britain as a euro zone "out" is that such a position will deprive the City of London of its status as Europe's most important financial centre. Judging from some of the events in the euro zone in the first week of full-scale euro trading, this is a worry that cannot be lightly dismissed.
The impact of the euro on financial services is one of the tests the British Chancellor, Mr Gordon Brown, set out when he established Labour's formal position on the single currency in October 1997. The document noted that financial services account for 8 per cent of the United Kingdom's gross domestic product and that the sector is responsible for £23 billion sterling (€32.75 billion) in overseas earnings annually. It noted that "there is no room for complacency". If that still remains the case - and there has been little euro noise from the Treasury since trading began - there already are some serious causes for concern.
Sure, 50,000 or so London traders were at their desks over the currency changeover weekend, and the Bank of England believes it may be the first institution to issue euro-denominated debt. These are useful public relations points. However, in the real world of financial markets and global influence, London could quickly slip off the map.
On the markets front there are several pointers to the arrival of a fresh economic order. The London futures and options market, Liffe, has conceded that around 80 per cent of money-market deals in euros are being conducted on the basis of the Euribor, the rate set by the European Banking Federation.
The City's alternative, euro Libor, looks as if it is in deep trouble. Prior to the arrival of the euro Libor, the London Interbank Offered Rate was the reference rate for trades and transactions in European currencies such as the deutschmark and the Italian lira, as well as the American dollar and the Japanese yen.
The desertion of Euribor trade, partly as a result of pressures from the euro zone members, has led to a fight-back by the London futures and options market, which is waiving transaction fees in its euro money-market product and swap futures.
However, Liffe, which has since strengthened its management, may have made its move too late, as it did with the German Bund contract, which migrated to Frankfurt, and the stubborn decision to hang on to open outcry trading after its SwissGerman rival, Eurex, had demonstrated the value of electronic systems.
The very technical Euribor debate is symptomatic, however, of other developments which could put the City's leadership in peril over a period of time. For the moment, London is able to protect itself under the rubric of larger, more liquid markets and flexibility. However, that will not always be the case.
In Germany, which in the first week established itself as the main player in the euro zone by ensuring that German bonds are the benchmark for the currency zone, Anglo-Saxon-style capitalism - of the kind the City has made its own - is now becoming commonplace.
German Re, the world's largest re-insurer, has said it is hiving off €31 billion of shareholdings early next year, following the precedents already set by Deutsche Bank and Dresdner Bank. The new structures - which have in part been adopted for tax reasons - have also been seen as a prelude to selling off huge bank or insurance holdings in Germany's industrial base.
A good guide to Germany's fresh entrepreneurial spirit is the success of its Neur Markt, on which it is basing plans for the Euro-NM alliance.
This will be the euro zone's answer to Nasdaq. The market, which only came into existence in March 1997, has already attracted 63 listings, mainly of hi-tech companies, and has gained 175 per cent over the last year.
Neur Markt has signed agreements to join the hi-tech, smaller companies markets in France, Holland and Belgium. Britain's Aim market has attended the talks but looks as if it could be stranded on the sidelines.
The Stock Exchange in London has recognised the need for a common European platform in blue-chip shares. However, it has to accept that it will share the spoils with Frankfurt, with the German trading platform - which has more in common with much of the rest of Europe - likely to be dominant.
London could also be hurt by its Rolls-Royce share settlement system, Crest, seen by many as over elaborate and too expensive to be of much value beyond Britain. Beyond the technical issues, which in practical terms could drive Britain towards the euro zone faster than might have been anticipated, broader issues of international standing also have been raised. Symbolically, in the European issue of the Wall Street Journal, it was the thoughts of Mr Wim Duisenberg, president of the European Central Bank, which edged the Bank of England's interest-rate cut out of the headlines.
Elsewhere in the euro zone, Mr Keizo Obuchi, the Japanese Prime Minister, went to Paris to build support with President Chirac for a pact to promote currency stability. Until now, London has been at the centre of Group of Seven initiatives of this kind, and among the "holdouts", opinion in Denmark and Sweden is now moving towards the euro area, after considerable periods of scepticism.
In some respects British Labour's "wait and see" approach is understandable. There has been reason, even in the initial weeks, to be concerned that the euro may not have the durability to become a reserve on a par with the dollar. Disputes about the ECB's secrecy in money market operations have already emerged.
In purely practical terms, however, the slow drift of business from London to the euro zone should be closely monitored and countered. The failure to do so could rapidly erode the City's competitive base in the global markets.
