Clarke finds few soulmates in Switzerland

Jeremy Warner hears conflicting views of the future at the World Economic Forum in Davos

Kenneth Clarke, Chancellor of the Exchequer, is accustomed to feeling isolated and beleaguered over his pro-European views back home in Britain, so it might reasonably be expected that out here at the World Economic Forum in Davos, Switzerland, where all the talk is of integration, globalisation and a casting aside of national boundaries, he would feel almost wanted and at home.

Not a bit of it. Mr Clarke's recently expressed views, repeated again over the weekend, that monetary union will probably not go ahead on time in 1999 and, even if it does, most European member states will not have converged sufficiently to justify it, are about as out of place here among Europe's elite finance ministers and central bankers as his pro-European views are in his own Cabinet.

Certainty is something that has come to be expected from committed federalists like Jacques Santer, President of the European Commission, who with customary bluntness stated that the process of monetary union was now irreversible. But the case was equally strongly argued by Theo Waigel, Germany's Finance Minister. Monetary union not only would go ahead on time but it ought to, he said.

Rodrigo de Rato y Sigaredo, Deputy Prime Minister of Spain, was equally adamant that Spain would be ready on time, and he waxed lyrical about the benefits and reforms being brought about in the Spanish economy by the push to meet the Maastricht criteria.

Jean-Claude Trichet, governor at the Bank of France, was the same. Far from reinforcing the European social and economic model, monetary union would be a force for change and reform in labour markets, helping to make Europe competitive once more.

Mr Trichet is not a politician: central bankers are very different animals. But he was broadly singing from the same hymn sheet as everybody else. To them, Maastricht is not the straitjacket it is often depicted as in Britain, but a force for change.

Mr Clarke was not entirely alone, however. Ulrich Cartellieri, a member of the board of managing directors of Deutsche Bank, was apocalyptic in his view of monetary union. He predicted that few countries would be able to meet the 1999 deadline and he expected some sort of crisis later this year as markets came to terms with this.

"I am afraid financial markets might soon begin to question whether it is smooth sailing towards the euro or whether there are obstacles in the way and we may be heading towards the rocks," he said.

Howard Davies, deputy governor of the Bank of England, is so concerned about the possible fallout in bond markets if the euro falters he believes banks should ``stress test'' their portfolios to ensure that capital could withstand such a crisis.

And George Soros, the currency speculator and philanthropist, argues that monetary union would create irreconcilable stresses and strains throughout Europe and unparalleled political division. A common currency, he insisted, was merely a stepping stone to fiscal and political union. Without addressing that reality, a broadly based single currency was unworkable. There was also the irrepressible John Neill, chief executive of Unipart, who insisted that it was hard to understand how shorter working hours, longer holidays and higher social and sickness benefits could ever hope to add to Europe's competitiveness.

All these people were very much the exception, however. The general picture was one of faith in the euro and the benefits it would bring.

Mr Clarke spoke in strong terms. Europeans had became unduly obsessed with the currency debate, he said. It was a mistake to believe the answer to enhanced competitiveness was the elimination of an exchange rate risk. No country should go into the euro unless fully convergent, he insisted.

``Convergence is more important than the timetable,'' he said. ``Without very great structural reform in Europe we will be the old countries in decline watching the rest of the world overtaking us.''

But while most of Mr Clarke's remarks about Europe fell on deaf ears, he was in other respects preaching to the converted. There was a surprising degree of unanimity over the need for deregulated labour markets, liberalisation, privatisation, and structural reform in social and pension policy. Even Theo Waigel conceded that Britain had something to teach the rest of Europe in this department.

But perhaps most striking of all is the apparent conversion of Spain to the cause of labour market deregulation. Mr de Rato y Sigaredo, who also doubles as Spain's Finance Minister, was emphatic about the need for more flexibility in labour markets. "In our finances we need to change from a culture of instability to one of stability. This must be accompanied by structural change and deregulation of the labour markets," he said.

What seems to be happening here is that the euro's justification is being reinvented. Convergence and deregulation of labour markets are conditions of Maastricht but the wording is vague and low-priority. Certainly they were aspects of the treaty which most of Europe believed could wait. Not any longer, it would seem. Far from being a way of safeguarding the European social and economic models, the euro is now seen as a motor for change too.

Mr Santer's view of monetary union as a way of protecting the "suitably modernised" European way seems to be an increasingly irrelevant one.

Howard Davies put it best in an aside, when he said the paradox was that economically Britain was much better prepared for monetary union than those politically committed to it.

However, as Europe dashes down the road towards the American model, the US seems to be heading in the opposite direction. There was no disguising the sense of triumphalism among the large US contingent here at the performance of the American economy.

Larry Summers, the US Deputy Treasury Secretary, was happy to take the credit, even though the renaissance in corporate and entrepreneurial America would seem to have little to do with the policies of his administration. None the less, he reflected a general mood of self doubt when he suggested that perhaps the US had something to learn from Europe in dealing with its profound social problems. Competitiveness, it seems, is not everything.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Extras
indybest
News
ebooksNow available in paperback
Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
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

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Carlton Senior Appointments: Sr Wealth Manager - San Francisco - Inv AdvisoryFirm

$125 - $175 per annum: Carlton Senior Appointments: Senior Wealth Manager – In...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum