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
News
Nick Clegg on the campaign trail in Glasgow on Wednesday; he says education is his top priority
peopleNick Clegg remains optimistic despite dismal Lib Dem poll ratings
Arts and Entertainment
Déjà vu: David Tennant returns to familiar territory with Anna Gunn (‘Breaking Bad’)
tvReview: Something is missing in Gracepoint, and it's not just the familiar names
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?