Bermuda may be forced into independence from Great Britain by the new European Union (EU) currency, the euro.

A report in United Press International entitled "Euro enthusiasm marred by tax worries" highlighted the impact of the euro in the EU, Britain and regions considered offshore tax havens.

The article said that while it was anticipated that the logistical side of the introduction of the euro would be a smooth one, the wider economic and financial implications after it is over seem to be a bigger headache for EU leaders.

The article said: "Not least is the continuance of Great Britain's long association with offshore banking. The Channel Islands, long seen by European Revenue services as a loophole, are but one black hole for tax dodgers. They form part of a British chain including the Isle of Man, the British Virgin Islands and the Turks and Caicos Islands, and Bermuda in the Caribbean."

Despite Bermuda not being in the Caribbean, the article added that pressure has been building up in Brussels in recent years to persuade Britain, a member of the EU but not the euro zone, to close its tax havens.

But with the Bank of England's Eddie George declaring last week that switching to the euro would damage Britain's prospering economy, it is by no means clear that Britain will agree to do so in the near future.

"This leaves the euro zone economy dependant largely on Germany, currently suffering serious economic problems of its own. Germany has told British Prime Minister Tony Blair he must get his country into the euro and all the signs are that Blair is planning an early referendum on the back of a massive campaign to get the British to accept the European Union.

"The Isle of Man is only loosely tied to the British Crown and a leading banker told United Press International last week it was expected among the Island's financial community that British acceptance of the euro would eventually lead to Independence," the article said.

And a leading lawyer in Bermuda who refused to be named told the reporter: "Although Bermuda has opted to remain a Crown colony, there is a feeling that we are coming under such intense pressure from the European Union through the British Government to end our traditional banking advantages that there is a growing demand for complete independence."

A recent report by The Derbyshire (Isle of Man), a wholly owned subsidiary of Derbyshire Building Society, said it was unlikely the UK would enter into the euro during the course of this parliament.

The Derbyshire reasoned this saying: "There is the prospect of the UK joining the euro, which would involve UK interest rates coming into line with the those in the euro block.

Euro rates are currently lower than those in the UK and are likely to be cut still further by the European Central Bank as they seek to drag the euro zone out of recession and stimulate growth.

"However, the differences in performance between the UK and the euro zone decrease the chance of the economic convergence tests for entering the euro being met.

"This means that we are unlikely to see a referendum on UK entry into the euro during the course of this parliament."

The euro was introduced as the currency for 300 million people in 12 European countries on January 1.

Other smaller nations have also adopted the currency such as Monaco, the Vatican, Kosovo and parts of the Balkans.

Finance Minister Eugene Cox did not return calls to The Royal Gazette yesterday.