France the only threat to timetable

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The Independent Online
The financial crisis in the Far East continues to monopolise the attention of the pundits and shift the spotlight away from Europe and EMU. European stock markets have suffered heavy falls but the effect on the real economies of Western European countries should not be so serious.

Nikko Europe's Julian Jessop notes that the German stock market is down 20 per cent but it is still 40 per cent higher than at the start of the year, German banks are conservative and have only a limited exposure to the crisis economies, and Asia, including Japan, takes only 8 per cent of German exports.

The risk of a rise in German interest rates has receded since the Bundesbank dropped hints that convergence could be achieved by Italy and Spain cutting interest rates rather than Germany raising its rates.

Meanwhile strong economic growth in Europe has reduced the risks of candidate countries failing the public sector borrowing test, and the only real threat to EMU proceeding on time now looks to be a sudden collapse in the French economy.