The news that the euro has displaced the US dollar as the world's principle currency accounting for 45% of the global market compared with 37% for the dollar, offers yet another illustration of the potential economic gains of British membership of the single currency.

As Europe's share of world trade is greater than that of the US, it was always likely that the euro would replace the dollar as the main denomination for world trade. Nonetheless, when you consider that, as recently as 2002, the euro represented 27% of the global financial pie, compared with 51% for the dollar, it is clear that, after some initial teething problems, the euro is rapidly establishing itself as the world's strongest currency. Certainly, it conclusively rubbishes the notion put about by eurosceptics in the UK that the euro was a 'toilet currency'.

The creation of the single currency in 1999 has enabled the development of a deeper and more liquid financial market, consolidated by a strong, growing eurozone. As Rene Karsenti, President of the Internal Capital Market Association, puts it: "it is the stable interest rates in Europe that have helped and the fact that the euro has strengthened and shown resilience".

From the perspective of the UK, this news again demonstrates why, in the UK's case, staying out means missing out. Firstly, UK companies within the EU have to bear hedging and conversion costs of currency that our German, French, Dutch, Irish etc. competitors don't, leaving the latter with a clear advantage.

The next step for the single currency will be for world commodity prices to be fixed in euros rather than dollars. At present, many of our production costs rise and fall with the value of the dollar. Because of this, British manufacturers are hostages to fluctuations in the American economy that have nothing to do with our suppliers nor our own economy. This advantage that the Americans currently enjoy, of having world commodity prices fixed in their own currency, will be transferred to Europe. It would be nice if the UK were able to take advantage of this.