Britain's economy is more in tune with that of the US than it is with Europe, according to a top academic.

In a potentially fatal blow to the "convergence" test, the study found that the UK's cycle is "strongly correlated" with that of the US and experiences sharper fluctuations in GDP that the economies on the European continent do.

"In addition, the evidence from regional fluctuations suggests that no UK region is strongly associated with the European cycle," his assessment for the Treasury warns.

But the study by professor Michael Artis of the European University Institute also found that there is a "positive correlation" between the cycle of the British economy and the cycle in other European economies.

And it suggested that were Britain to join the single currency then the business cycle would "eventually change" towards that experienced on the continent.

"But the outcome of these changes cannot be predicted with confidence," it added.