ERM Crisis: Major welcomes 'stimulus': Downing Street

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The Independent Online
JOHN MAJOR yesterday welcomed the decision to widen the bands of the European exchange rate mechanism as an 'opportunity for lower interest rates and a stimulus to economic growth'.

Branding the EC timetable for monetary union as 'totally unrealistic', the Prime Minister can now look forward to the possibility of a calmer relationship with the anti-federalist wing of his own party.

Sources said they believed that with the potent weapon of monetary union no longer available, damaging party splits during next year's European elections could be avoided.

It will also make it more difficult for the party's right to justify a leadership challenge in the autumn of next year, when Mr Major's unofficial 'probationary period' runs out.

Nevertheless, yesterday proved to be a day of ironies, even contradictions. As Mr Major savoured what could count as one of the better days of his premiership with an 'I told you so' message, critics of the Maastricht treaty - including the recently converted Norman Lamont, the former Chancellor, pronounced it dead.

Mr Major lost no time, however, in ratifying the treaty within hours of the announcement by Lord Rees- Mogg, the former editor of the Times, that he would not appeal against the High Court's rejection of his claim that ratification of the treaty was legally defective.

Downing Street insisted that the combination of events meant Britain was 'left with the positive things that we are arguing for'. These were said to be co-operation on social and security policies, the regular audit of EC directives and the fining of member states that disobey the rules of the internal market.

In a statement issued from his home, Mr Major emphasised the 'fault-lines in the system' and said the decision to suspend sterling last September had been vindicated.

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