And the European Commission raised the stakes further by proposing that countries which did not join full monetary union in 1999 should be inside it by the year 2002 when Euros and cents will come into circulation.
It also proposed that EU member states, including Britain, whose economic performance does not meet the rules for monetary union, should have their Budgets vetted in Brussels before presenting them to national parliaments. The idea was described by a leading Tory last night as "in the world of fantasy".
At a meeting in Verona, Italy, yesterday, European finance ministers took no view on these proposals. But Germany and France insisted that Britain must join a new exchange rate mechanism (ERM2) in the run up to European monetary union.
Kenneth Clarke, the Chancellor, claimed one victory: the Queen's head will appear on one side of the Euro coin.
The unexpectedly rapid drive towards a common currency is already alarming Tory backbenchers, and MPs returning from the Easter recess on Tuesday will warn Mr Clarke that Britain must say "Sorry, No".
The Chancellor said yesterday he had won agreement that there would be no obligation on Britain to join an ERM2. "There is no prospect of Britain joining any ERM in the forseeable future," he insisted. There were no legal provisions that could force Britain to join, he said.
However, Germany and France, backed by the European Commission contradicted Mr Clarke on almost every point. They said "a majority" had agreed that membership of an ERM2 would be a "condition" of entry to monetary union, and that Britain would have to be inside an exchange rate mechanism for two years prior to joining. Only Sweden took Britain's side, in arguing that the Maastricht Treaty contains no legal right to insist on ERM membership.
David Howell MP, Conservative chairman of the Commons Foreign Affairs Select Committee, dismissed the new deadline of 2002 as "irrelevant" to Britain. "We don't want to join at the moment, and we don't think the project would be good for Britain's interests. Setting new dates is of no great significance."
He also spurned the suggestion that the European partners would have the power to vet British Budgets. "The idea that you take our whole tax and spending plans to the EU and imagine they don't leak out all over the place is cloud-cuckoo land. And we would have to change the whole system of parliamentary fiscal control. That would be an extraordinary development, in the world of fantasy."
Tony Marlow MP, a leading critic of the EU, said 90 per cent of Tory backbenchers had become Eurosceptic over the past four weeks because of "the total nonsense over BSE", on which Douglas Hogg, the Agriculture Minister, will report to the Commons on Tuesday. On the currency issue, he added: "The whole thing is bogus. The Commission doesn't have these powers, and we will not give them to them."
The Verona meeting came after months of uncertainty over monetary union, and was seized on by most countries as a chance to inject new momentum .
Jacques Santer, the Commission President, told the ministers the ERM2 was "indispensible." Only those countries whose economies were way out of line with the Maastricht criteria would be allowed to remain outside, he said, and this would not apply to Britain.Reuse content