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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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• EU euro 2002
  
• EU euro 2002, 2
  
• EU euro 2003
  
• EU euro 2006
  
• EU euro 2007
  

What is this referendum all about and how could its results influence the real estate market in the country?

This pro-Euro referendum isn't only about finances, it's also about the public trust, about the trust for Prime Minister Blair. After succeeding in most of his projects - devolution process in Scotland and Wales and "Good Friday" process in Northern Ireland to mention just two of them, he needs new challenges if he hopes to continue to rule the country. The majority of British citizens still oppose embracing the Euro so the challenge for Blair is real and will deserve his full attention in the months ahead.

How could this referendum and an eventual "Yes" victory influence the real estate market in the United Kingdom? The real estate market has been characterized in recent years by price increases far above the average of the rest of Europe. In other words the market is booming and it seems that this trend will continue far beyond the end of 2002.

One of the financial instruments to stop this inflation is to raise interest rates, which won't be easy if the financial policy isn't decided by the Bank of England, but outside the country. Today the main annual interest rate in the UK is 4%, in the Eurozone - 3.25%. If London enters the Eurozone that will bring down, not up, the interest rates, thus further accelerating the price increases on the real estate market. The slower than expected economic recovery in the continental Europe doesn't give much chance for substantial interest rate increases so they could surpass the rate in the UK by the middle of 2003.

Why is the spring of 2003 the best time for the referendum? First of all, in May 2003 there will be municipal elections in the country so the government can try to sell the Euro-idea together with its party nominees. Second, there are some purely technical procedures that can't be finalized in less than several months so a referendum before the spring of 2003 looks unlikely. Third, general elections in the UK have to be called in 2006 at latest. By that time the government would want to have the first major positive results of the Euro system, i.e. low and predictable interest rates, sustainable economic development and booming export, now hurt badly by the strong pound.

To have all this by 2006 at latest, the Prime Minister Blair has two options - to call the referendum for May 2003 or postpone it until after the European parliament elections in 2004. The second option will limit the eventual positive impact of the Euro and could cost the power to the Laborist government. Thus May 2003 seems to be the ideal time for a referendum both from apolitical and an economic point of view.

If Blair wins, this could be a good new start and pave the way for his third government term in office, if he loses, this could be the beginning of the end of his brilliant political career.

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* - An association of European Union countries with a common money Euro and common interest rate policy decided by the European Central Bank.

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