UK pressed by Commission to rejoin ERM
Thursday 04 February 1999
Asked about the UK position, Yves-Thibault de Silguy, Monetary Affairs Commissioner, reminded the British government that, of the five criteria for membership of the single currency, "one of them is ERM".
After issuing a statement praising most aspects of UK economic performance, Mr de Silguy told a press conference: "If and when the UK decides to join the euro it will have to comply with the same conditions as those complied with by the first wave countries." These include sticking to the "margins set out in the ERM," he added.
The Commission statement came in response to the "convergence programme" in which the Treasury outlined how policy would match targets for euro membership. Highlighting worries on exchange-rate fluctuations, Brussels called on the UK to "continue with its stability-oriented framework for macro-economic policy with a view to achieving exchange-rate stability".
It held back from a formal plea to the UK to join the ERM in deference to the British single currency opt-out. By contrast, the Commission said Sweden, the only other EU nation neither in the euro nor the ERM, was expected to join "in due course".
Nevertheless, Mr de Silguy's reminder will embarrass the Government, which knows that re-entering the ERM would be politically explosive. In September 1992, sterling crashed out of the mechanism, undermining the credibility of John Major's administration.
While Tony Blair's government appears anxious to prepare British public opinion for euro entry, Gordon Brown, the Chancellor, has denied any intention to rejoin the ERM. Under the Maastricht Treaty, membership of the ERM for two years is a precondition of entry into monetary union. Since the euro's debut, the mechanism has been replaced by "ERM2", launched with Denmark and Greece as members.
Yesterday Alan Donnelly, leader of the European Parliamentary Labour Party, joined the debate, arguing that the treaty refers to the original ERM, not ERM2, and hence Britain would not be barred from joining immediately after a referendum. He added: "Those who say there is a treaty requirement to join ERM2 are simply wrong. If the fundamental economics are right, membership or otherwise becomes an irrelevance."
Although the 11 member states are unlikely to hold Britain to the letter of the Maastricht Treaty's two-year stipulation, a prolonged period of exchange-rate stability would almost certainly be demanded.
That will be a problem for the Chancellor, and could force him to shadow the euro even if he escapes the full ERM membership provisions. Otherwise Brussels gave the UK a good bill of health, approving "realistic" projections of public finances being close to balance by 2002 and highlighting the rising level of government investment as a share of GDP.
Outlook, page 17
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 3 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 4 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 5 April Fools' Day 2015: The best hoax news stories from around the internet
Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
University of Cambridge: Remains of 1,300 scholars are found under building
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...