Brussels insists Britain must rejoin the ERM

BRITAIN would have to rejoin the revamped exchange rate mechanism - which the pound crashed out of in September 1992 - if it wanted to abandon the pound and join the euro zone, the European Commission made clear yesterday.

But the Commission has left the door open to technical membership for a period shorter than the two years mentioned in the Maastricht Treaty, saying that exchange rate stability is the key. A revamped ERM is set to be launched next January.

In its definitive recommendation on economic convergence of the countries fit to join EMU in the 1999 first wave, the Commission ruled out Sweden - which has never been a member of the ERM and which has experienced major fluctuations against the ERM currencies.

But the Commission recommended that Italy and Finland, who only joined the ERM in November 1996 and October 1996 respectively, and therefore do not strictly fulfil the membership criterion, should be admitted.

Clearly the onus would still be on Britain to ensure sterling shadowed the euro after its launch and to find a way of demonstrating stability without being in the new currency grid. The Treasury repeated yesterday the insistence of Gordon Brown, the Chancellor, that Britain has "no intention" of rejoining the ERM.

That aside, the budgetary position of the UK and its performance on inflation would qualify Britain for membership.

The Commission's spring economic forecasts also show Government borrowing as a percentage of gross domestic product is expected to fall this year to 0.6 per cent, down from 1.9 per cent in 1997, due to the windfall tax on the profits of privatised utilities.

The Commission forecasts the deficit will fall again in 1999 to 0.3 per cent. It warns that because the bulk of the revenue from the windfall tax will not be spent until after 1998, the positive effect on the deficit will begin to unwind as revenues are spent.

Britain is one of only four members whose debt is below the 60 per cent of GDP target set by the treaty. The spring forecasts put the British debt to GDP ratio at 52.3 per cent this year falling to 50.9 per cent next year.

Outlook, page 25

News
newsNew images splice vintage WWII photos with modern-day setting
Arts and Entertainment
The star dances on a balcony in the video
music
News
Official estimates of the level of sham marriages range between 4,000 and 10,000 every year
science
News
Damon Gameua took on a low-fat, high-sugar health food diet for 60 days
peopleAustralian director Damon Gameua was given warning by his GP
PROMOTED VIDEO
News
ebooksNow available in paperback
Sport
sportComment: Win or lose Hamilton represents the best of Britain
Life and Style
tech
Extras
indybest
Sport
Arsene Wenger reacts during Arsenal's 2-1 defeat to Swansea
footballMan United and Arsenal meet on Saturday with both clubs this time languishing outside the top four
News
i100BBC political editor Nick Robinson had a lot of explaining to do
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

Immigration: Obama's final frontier

The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
Bill Cosby rape allegations explained: Why are these allegations coming out now? Why didn’t these women come forward earlier? And why has nobody taken legal action?

Bill Cosby rape allegations explained

Why are these allegations coming out now? Why has nobody taken legal action? And what happens next for the man once thought of as 'America's Dad'
Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain

You know that headache you’ve got?

Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain
Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

Scoot commute

Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
Paul Robeson: The story of how an American icon was driven to death to be told in film

The Paul Robeson story

How an American icon was driven to death to be told in film
10 best satellite navigation systems

Never get lost again: 10 best satellite navigation systems

Keep your vehicle going in the right direction with a clever device
Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

Paul Scholes column

England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Michael Dawson: I’ll thank Spurs after we win says defender as he prepares to return with Hull

Michael Dawson: I’ll thank Spurs after we win

Hull defender faces his struggling former club on Sunday ready to show what they are missing. But he says he will always be grateful to Tottenham
Frank Warren column: Dr Wu has big plans for the professionals yet he should stick to the amateur game

Frank Warren column

Dr Wu has big plans for the professionals yet he should stick to the amateur game
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines