Prescott: house prices biggest bar to joining

Soaring prices and home owners locked in to variable mortgages are a key factor in preventing the UK adopting the euro, Deputy Prime Minister John Prescott has admitted.

'Because of very high prices, particularly in the South East, you have mort gages that are more variable than on fixed rates and to a certain extent that is feeding inflation more than in Europe,' he said. 'Obviously inflation and interest rates play a critical part in the economic and monetary union argument.'

With housing starts at their lowest since World War One, Prescott is determined to make local authorities and housebuilders release more land to tackle the problem. Two studies - by Professor David Miles on long-term fixed mortgage rates and Kate Barker on housing supply - will be ready by next year's Budget.