Storms ahead for monetary union

It has been a rather quieter week for monetary union watchers after the recent shocks involving Bank of England independence and German gold stocks, but it is likely to be the calm before the storm.

Next week sees Italy launch its next three-year economic plan, which will test its ability to adhere to EMU targets, but more important still will be tomorrow's first round of voting in the French elections, whose outcome could set the seal on whether the whole project goes ahead on time.

Opinion polls, now banned until the final results are known, show the centre-right government with a fairly comfortable lead, albeit drastically reduced from its current 367 seat majority.

The expectation in the markets is that Alain Juppe and his Gaullist-led coalition will show a stiffer resolve in holding to the strict criteria for monetary union that the Germans want than their socialist opponents. Unanimity between France and Germany would vastly increase the chances for the project kicking off in 1999 as planned.

But the waves from last week's decision by Germany to revalue its gold stocks continue to lap around EMU. The move has been widely condemned, not least from within the country itself, as a piece of creative accounting to let Germany off the hook when it became clear that its public deficit this year will comprehensively bust the 3 per cent of gross domestic product laid down by the Maastricht Treaty.

With Chancellor Helmut Kohl now apparently backing down from using revaluation as a deficit reduction device, at least this year, the implications for EMU remain opaque.

In the midst of this uncertainty, the broad consensus among our panel appears to be edging further towards EMU arriving on time, but in what form still remains unclear. Robert Lind of ABN Amro says the revaluation "sent a clear message that the German government will do whatever it can to meet the Maastricht convergence criteria."

Like Darren Williams of UBS and Julian Jessop of Nikko Europe, he believes the move makes it difficult for Germany to argue that apparently less economically rigorous countries like Italy should be excluded. At the same time, many of our panel point out that it is becoming increasingly likely that "peripheral" countries like Spain and Portugal will have to be included.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent