Clarke stands firm on EMU

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The Independent Online
The Chancellor of the Exchequer, Kenneth Clarke, stood firm against the rising tide of Euro-scepticism in the Tory party last night with a robust dismissal of "ridiculous suggestions" that a single currency would surrender sovereignty to a "Europe an super-state".

Going out of his way to stress the goal of a "strong Britain in the heart of Europe", Mr Clarke put his authority behind a toughly worded call for the eventual decision on monetary union to be based on "hard-headed" economic grounds and not "clouded by political dogma".

Mr Clarke secured a grudging and heavily guarded welcome last night from Euro-sceptics for his "realism" in broadening the economic criteria that would have to be satisfied before Britain subsribed to a single currency.

But they were much less happy at the lengths the Chancellor went to to underline the potential benefits - as well as dangers - of monetary union. He called for Britain to exercise the same influence as France and Germany on the EU and added: "We will notsettle for observer status or become a sleeping partner."

Allies of the Chancellor billed the speech as a "contribution to party unity" and emphasised that he had not repeated his earlier explicit commitment to the goal of a single currency. But his magisterial dismissal of arguments that EMU would mean a surrender of sovereignty contrasted sharply with John Major's assertion on Tuesday that it was a "constitutional" as well as an economic issue.

He fulfilled advance billing and followed Mr Major's lead, set last week, by spelling out economic criteria beyond those explicit in the Maastricht treaty which would have to be taken into account before Britain could accept monetary union.

Mr Clarke warned that countries with "inflexible labour markets" would be "poor candidates" for EMU because of the risk of high unemployment - threatening the stability of the EU as their governments faced "greater social unrest" and demanded big switches of resources from "their more successful partners". Whitehall sources said this meant that the participation of such - mainly Mediterranean - countries could well be a reason for Britain not joining EMU.

At the same time, the Chancellor posed a series of so far unanswered questions about the operation of a Central Bank.

Euro-sceptic MPs, more than 100 of whom have signed a Commons Early Day Motion congratulating Mr Major on his increasingly sceptical stance towards a single currency, will be displeased by Mr Clarke's claim that abandoning his right to set interest rateswas a sacrifice of the "nation state".

Speech and reaction, page 8