Business leaders were looking forward to the Inter-Governmental Conference that will start early next year, with the launch yesterday of position papers by the CBI and British Chambers of Commerce. These organisations are in the pro-European lobby, and are eager to make sure Britain has a credible negotiating position in the debate on the European Union's future.
Monetary union is only one of the issues on the IGC's agenda but it is perhaps the one of most significance for Britain. Even though the earliest start date for the single currency has been formally set back two years to 1999, Britain still in effect has to decide by the start by 1997. Under present arrangements all those joining in monetary union have to have been members of the ERM for at least two years; if Britain wants to opt in it has to decide in two years' time.
It is not surprising that the future deputy governor of the Bank of England should fall into line with the Governor and the Chancellor of the Exchequer on EMU. Howard Davies, still the CBI's director-general but soon to be deputy governor of the Bank, shares the common-sense approach to EMU adopted by Kenneth Clarke and Eddie George - make sure that participating countries have achieved real economic convergence, wait and see what economic conditions are like closer to the time.
The trouble is that the common-sense line ducks the difficult questions. Astonishingly, there has been very little serious empirical research on what the costs and benefits of monetary union will be for different countries. Numerous reports have set out the lines of debate and taken positions. Few have ground through the numbers.
It may be the case that these are impossible calculations to make; economic behaviour is bound to change after such an enormous step. On the other hand, there is no other sensible way to proceed with such an important judgement. The research famine is a contrast to the feast of number-crunching that preceded the adoption of the single market. Perhaps it just goes to prove that the decision will be an entirely political one after all.Reuse content