The euro has strengthened considerably against the pound.

The euro has hit a record high against sterling this month – its strongest growth in 10 years since the currency’s introduction into the world financial market in 1999, followed by its launch as notes and coins in 2002.

According to the Guardian newspaper, the euro rose 18% against sterling in December 2008, mainly due to the fear of a 2009 UK recession and the weakening dollar. The currency now accounts for 27% of official reserves.

A lack of spending by UK consumers has also contributed to the weakening pound, as homeowners are choosing to pay off their mortgages rather than spend in the shops, as the demise of retailers such as Zavvi and USC reveals.

The weakening of the pound has a direct impact on UK holidaymakers. Those travelling to any one of the 16 member states that use the euro as currency (on 1 January 2009, Slovakia will become the 16th country to embrace the currency), will get fewer euros for their money than at any other time since its introduction.

The Post Office is offering just €99.29 for £100, whereas in December last year, on average £1 would have bought more than 1.4 euros and at its peak in 2000, the pound was worth more than €1.7, according to the BBC.

The UK decided not to join the Euro for economic reasons. The decision was considered again in 2007 by the then Chancellor Gordon Brown, however after carrying out five economic tests, which considered issues such as investment and employment, the decision to join was again declined.