Softer terms expected on Maastricht criteria

John Shepherd

The chances of a single currency beginning on time are continuing to fall although a majority of The Independent's nine-strong panel of economists still believes the 1999 start date will be met.

Following a fall last week in the probability of EMU starting on time from 69 per cent to 61.4 per cent, there has been a further drop this week to 58.5 per cent. The probability of a delay has risen sharply from 30.6 per cent to 35.5 per cent.

Many of the panel members believe there is a political will to press ahead with EMU and there will be a less rigid interpretation of the Maastricht criteria which will result in the southern Mediterranean countries, Spain and Italy, being in a broader-based single currency.

Alex Garrard of UBS said: "The recent gold spat in Germany and the outcome of the French elections are likely to lead to softer terms." Along with other members of the panel, he was encouraged by the inclusion of many pro-Europeans in the new French cabinet. "On the whole this leaves us confident EMU will begin on schedule."

One of the main concerns is how the German government, in the words of Robert Prior at James Capel, will "have to balance the books without creative accounting".