Hague goes for broke on euro
Wednesday 02 June 1999
Mr Hague sought to exploit the euro's 11 per cent fall against the dollar since its January launch. But he was condemned last night by pro-European Tories and industry leaders, who want the Government to step up rather than scale down its single currency preparations. In a significant hardening of the Tory line ahead of next week's European Parliament elections, Mr Hague said the Government should abandon the National Changeover Plan it unveiled in February, ditch its timetable for scrapping the pound, and end its commitment in principle to join the euro.
The Tory leader said Mr Blair and Chancellor Gordon Brown had "buried their heads in the sand" as the euro devalued. "The Government simply refuses to face up to what is happening to the euro here and now," he said.
Although Mr Hague insisted it was in Europe's interests for the single currency to be a success, his attack threatened the fragile Tory truce on Europe because it angered Kenneth Clarke and Michael Heseltine, who warmly welcomed the Changeover Plan in February. Ian Taylor, a former minister and leading member of the Clarke-Heseltine camp, told The Independent last night: "The party leadership should beware of letting party politics obscure the national interest, which is to put pressure on the Government to prepare whether we join or not. You cannot have a referendum unless the country is ready."
Ian Peters, deputy director of the British Chambers of Commerce, warned it would be "folly" to scrap the Changeover Plan. "Any future decision to go in would be lacking in effective planning," he said.
Downing Street and Robin Cook, the Foreign Secretary, condemned Mr Hague's remarks as "deeply irresponsible". Mr Cook said: "They're saying we should abandon the option even before we have made a choice on whether we wish to exercise that option."
Today Mr Brown will tell business leaders in Birmingham: "It is the height of irresponsibility that, having failed to prepare in any year up to 1997, the Tories now want to ensure that no preparations are made for the euro at all."
Amid increasing jitters among European Union leaders over the euro's weakness, there was confusion over whether EU leaders, who gather in Cologne tonight for a two-day summit, should try to shore up the new currency.
Germany suggested the summit would pledge to support the euro and declare that there would be no weakening of the rules requiring budgetary discipline by single currency members.
Speaking in Bonn, Hans Eichel, Germany's Finance Minister, said: "Germany has a clear position on the euro", adding that it would not hurt if government leaders repeated them in Cologne. But Downing Street sought to play down the issue, insisting the single currency was "not on the agenda".
The euro gained a brief reprieve on the currency markets yesterday, holding steady at just above $1.04 after recent efforts by European bankers and politicians to stabilise it.
But City analysts warned that the markets were determined to test the new currency to the limit, with many experts believing the euro could drop below parity against the dollar.
The European Central Bank, which meets in Frankfurt today, is in no position to defend the currency by raising borrowing costs in Euroland.
European elections, page 8 Business, page 17
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