George calls for calm on union

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Europe should not rush into monetary union with unnecessary haste, Eddie George, Governor of the Bank of England, said yesterday.

Mr George, speaking to an audience of French bankers in Paris last night, said moving towards monetary union must depend on economic conditions, and not be driven by the Maastricht timetable alone.

In a speech calling for economic realism, he said it would be ``unfortunate'' if some countries ``felt obliged to move at a pace that was driven by artificial deadlines rather than at a pace appropriate to their national circumstances''.

The EU is due to move to a single currency by 1999 at the latest.

Discussing the pros and cons of monetary union, Mr George said ongoing differences between countries, such as different rates of productivity or wage growth, could lead to long-term unemployment in some regions after monetary union.

Some of the problems would be addressed by the convergence criteria laid down in the Maastricht Treaty, which require governments to keep their budget deficits and government debt within certain limits, and their inflation and interest rates in line.

Mr George said the Maastricht criteria - which Britain is close to meeting - must be strictly applied.

He added that this would not address deep-seated structural differences between the European economies, which could make monetary union politically divisive.