Investment refers specifically to inward investment and so considers if joining the Euro would encourage firms to invest in the UK economy. The Financial Sector test considers how the UK joining the EMU affects the City of London's competitiveness. Finally the Overall Benefit for the UK measures if joining the Euro will promote increases in employment, stability and growth in the UK economy. .
Of the Five Tests, two appear more important than any others as, if they are passed then other tests are met by default as admitted by the Chancellor in early June. These two tests are convergence and flexibility and are apparently inseparably linked to investment and the overall effect on the UK. It seems that if the targets for convergence are met then investment will be a result. This will happen because if Britain's economic structures and business structures become more like those of Eurozone nations then the incentive for investment in the UK is the same as it would be in the rest of the Eurozone, thus "creating better conditions for firms considering investment in the UK- than if the UK were not in the EMU. The flexibility of the labour market would also be likely to affect whether or not firms would be willing to invest in the UK. We also can see how the overall effect to the UK economy would be affected by the first two tests being met as, convergence towards the same business structures found in the Eurozone would most likely require growth and an increase in the flexibility of the UK economy should ultimately lead to growth and less unemployment in the long term. One problem for the Chancellor, however, is the fact that currently Britain is far more flexible than most of the Eurozone and so to converge as required in test one will probably require jobs to be sacrificed in the UK which would e a problem both economically and politically (more important for Brown). .
On the 9 June of this year Gordon Brown ruled that Britain was not yet ready to join the EMU as four of the five economic tests had been failed.
