France looks to a softer euro

This week's Amsterdam Conference and Lionel Jospin's comments to the French National Assembly on Thursday, have reinforced views that when it does come, monetary union will be in the shape of a soft euro, encompassing a broad band of countries.

Mr Jospin's job-creating socialist agenda makes it likely that France will struggle to meet inclusion criteria, says Robert Prior from James Capel.

Chris Johns from ABN AMRO Hoare Govett said that Jospin's comments could raise tensions with Germany: "If you take the French at their word, they have a reflationist agenda, which is anathema to the Germans. If France decides the euro is not an engine for growth or jobs might be affected, they might have second thoughts."

While analysts are waiting for the audit next month to clarify France's financial position, Julian Jessop from Nikko Europe said that, given uncertainty in France, a broad euro was the best way to progress.

Hannah Nixon from DMG agreed: "Italy, Spain and Portugal are all likely to meet or beat the joining criteria. How can Germany say they can't join, given that they and France will probably overshoot?"