Bundesbank council member pleads for narrow EMU

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Sceptical remarks yesterday by a member of the Bundesbank's ruling council about the small number of countries that should be allowed into a single currency failed to dent the market's growing conviction that it will start on time in 1999.

Reimut Jochimsen said only those which had been successful in co-ordinating interest rates and keeping inflation down should be included.

He also criticised unnamed German politicians for weakening the strictness of the criteria for joining up - a statement taken as a hint that Italy should not join.

Alison Cottrell, an economist at Paine Webber, said: "If Helmut Kohl wanted Italy in, it would be difficult for him to have a battle of wills with the Bundesbank."

Italian Communists last week dropped opposition to an austerity budget but Romano Prodi's government was forced to scale down plans to cut pensions and concede a 35-hour working week - putting a question mark over its ability to meet targets for deficit reductions.