EU pleads with Blair for quick thinking on the euro

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The Independent Online
Britain came under fresh pressure yesterday from Brussels to join the European single currency as soon as possible. Rupert Cornwell says such demands are likely to increase as the year-end deadline for countries to announce their intentions draws nearer.

The latest entreaties came from the admittedly biased source of Yves-Thibault de Silguy, the EU commissioner for economic and financial affairs, who argued Europe would benefit from early British membership. The decision lay with the British government and parliament, he declared, "but it would be good for Europe if all member states are included".

Mr de Silguy's sentiments will be repeated by the leaders of Germany and Finland, both near-certain first wave Euro members, when they meet Tony Blair on Monday. Chancellor Helmut Kohl, in informal talks at Chequers early in day, and Mr Paavo Lipponnen later at Downing Street, will be treated to the official line, that British entry in the first wave remains "very unlikely," but not - so far at least - categorically ruled out. Unofficially however, hints have been multiplying that the UK wants to join soon after the January 1999 launch.

Politically, the main difficulty remains that of convincing a sceptical public of the euro's merits. A poll earlier this month found 61 per cent of Britons opposed to scrapping the pound; defeat in a promised referendum before the next election would be a crushing blow for Mr Blair.

In economic terms, the principal objection is that Euro membership could see the contagion of high unemployment in Germany and France spread across the Channel - an argument vehemently repeated yesterday by John Redwood, the shadow President of the Board of Trade and fervent Tory Euro-sceptic. But Mr de Silguy insisted European economies were picking up and the euro would make things better rather than worse. The single currency, he declared, would be "good for the economy, for investment and for growth".

Meanwhile Wim Duisenberg, the European Monetary Institute president who likely to be the first head of the European Currency Board, the future European central bank, said that countries who choose not to join in the January 1999 start-up "would be expected" to adhere to ERM-2, the revised exchange rate mechanism that would link the euro with the currencies of non-member EU countries. But after the humiliating exit of sterling from the original ERM in September 1992, even this limited new linking of the pound raises hackles in London.

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