Outlook: Brussels surveys hazy EMU future

The European Commission's report yesterday urging EMU aspirants to get a move on with the practical preparations for the single currency carried echoes of Nero fiddling while Rome burned. For over in Rome Romano Prodi's 17-month old government was staring crisis in the face. Its 1998 budget faces defeat over planned welfare spending cuts that are essential if Italy is to more or less meet the Maastricht criteria; and the government, long-lived by Italian standards, might have to call an election.

True, this is a bit unfair to the Commission. For there can be almost no doubt now that the single currency will start on time for a number of countries. Even for those not joining in the first wave - which almost certainly includes Britain despite the Government's efforts to pose as cuddly Europeans without actually changing the policy yet - a lot of practicalities still have to be addressed. British businesses, especially in financial services, will have to adjust to trading in euros anyway, and will have to update their accounting and computer systems at the same time as reprogramming them to cope with the year 2000 problem.

However, the future outline of the single currency is still hazy. Just over a year from the start date it is not at all clear when or whether two of the four biggest economies in the EU will join. Although many in the City now assume Labour will find it hard to stay out after 2002 there must be, as a big new study by ABN Amro points out, a political debat ahead. Even Euro-enthusiasts can be forgiven for thinking it is a reckless approach to such an important project to leave the debate until the last minute.

The implication of the uncertainties is more sharp moves in the financial markets. During the past week gilt yields have closed on bund yields as the markets responded to hints and whispers that the Labour Government was minded to join the single currency soon after the first wave. And Italian bonds and the lira have fallen in reaction to the fiscal and political turmoil. Both moves were predictable - and some analysts have indeed been predicting them for a few weeks. Gilts were undervalued, Italian bonds overvalued.

However, these moves could be reversed as long as the political decisions are put off. If Labour senses a swing in the public mood against EMU and drops a few uncuddly hints, it could lose the bonus it gained in the financial markets this past week.

News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
i100
Life and Style
fashion Designs are part of feminist art project by a British student
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
PROMOTED VIDEO
News
i100
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
tv
Sport
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
News
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Business Analyst - Banking - Scotland - £380-£480

£380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn