Cash deal may let France into single currency

The French government will announce a huge transfer of funds to the general public purse from France Telecom in its forthcoming budget in a bid to scrape into the list of countries qualifying for the single European currency from the start.

The state-owned telephone company is to give the government Fr37.5bn (pounds 4.7bn) in the next financial year in return for the transfer of its pension liabilities to the public sector budget before it is privatised.

The planned switch of funds from France Telecom is equivalent to 0.5 per cent of France's GDP and could be enough to make the difference between success and failure in the country's efforts to qualify for the single currency. Next year is the deadline for countries to meet all the requirements set out in the Maastricht Treaty if they want to join at the 1999 start date.

Although the EU Commission has predicted that France will just hit the 3 per cent of GDP target for its government deficit, most other forecasters think lacklustre economic growth means the shortfall will be much bigger.

The French proposal has been criticised by analysts in the financial markets. Julian Jessop, European economist at investment bank Nikko in London, said: "What they are proposing is against the spirit of the Maastricht criteria. It should not be allowed by the European Commission, but it might well be."

The transfer of cash now in return for future pension payments meant the deal was equivalent to issuing government debt, and not a real reduction in the deficit at all, he argued.

A spokesman for the EU's monetary affairs commissioner, Frenchman Yves- Thibault de Silguy, said the commission had not yet taken a definitive position on the planned transfer. Officials would make an objective decision on whether the proposal would reduce the French government deficit in a sustainable way, but not before Prime Minister Alain Juppe's government had presented the full details.

The French budget, due on 18 September, is widely expected to trigger another autumn and winter of unrest as the government tries to introduce expenditure cuts that will bring its deficit below the 3 per cent ceiling. But attempts to take liberties with the budget arithmetic are unlikely to go down well in the financial markets.

The news of the French move came as British businessmen issued a plea for the UK government to take a more active part in negotiations on the single currency. A group of leading industrialists warned yesterday that ruling out membership would put Britain at a competitive disadvantage.

The normally Euro-sceptic Institute of Directors agreed. Tim Melville- Ross, director general, said: "It would be quite wrong to rule out membership irrevocably."

Chancellor Kenneth Clarke fully supported the business plea. "We in Britain, as key players in this big European market, in our modern global economy, have got to be there playing a part and discussing it and making sure our patriotic British interests are defended," he told BBC Radio.

Comment, page 21

John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
Jonas Gutierrez (r) competes with Yaya Toure (l)

Newcastle winger is in Argentina having chemotherapy

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'

Actors star in Woody Allen's 'Magic in the Moonlight'

peopleThe Times of India said actress should treat it as a 'compliment'

Watch this commuter wage a one-man war against the Circle Line
We are phenomenally good at recognising faces; the study showed that humans have been selected to be unique and easily recognisable

Human faces unique 'because we don't recognise each other by smell'

Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show?
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
A male driver reverses his Vauxhall Astra from a tow truck

Man's attempt to avoid being impounded heavily criticised

Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
The Guildhall School of Music and Drama is to offer a BA degree in Performance and Creative Enterprise

Arts and Entertainment
Emma Thompson and Bryn Terfel are bringing Sweeney Todd: The Demon Barber of Fleet Street to the London Coliseum

Returning to the stage after 20 years makes actress feel 'nauseous'

Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week