Kohl currency hopes alarm Tories

THE GOVERNMENT faced fresh disarray over European monetary union yesterday as the Tories were forced on to the defensive by a declaration from Chancellor Helmut Kohl that a single currency was both desirable and inevitable.

The Government's carefully constructed neutrality on the issue started to unravel at the end of the first week of the European election campaign, when David Heathcoat-Amory, Minister of State at the Foreign Office, said a single currency would 'dilute the national identity'.

Mr Heathcoat-Amory's assertion that monetary union would mean a transfer of economic power was strongly reminiscent of the suggestion - regarded by Downing Street as going well beyond government policy - by his fellow-Europhobe Michael Portillo a month ago that a single currency would undermine parliamentary sovereignty.

In a BBC interview the German Chancellor was asked if the UK 'must get used to the idea' that eventually there would be a single currency. He replied: 'I am, of course, in favour of a single European currency. It will come, I have no doubt at all, but it must be a stable currency.'

The remarks contrasted sharply with those of John Major, who said in a Daily Express interview yesterday: 'I plan to live for a very long time. I do not see a single currency for a very long time. I'm not sure it will come about.' Jack Straw, Labour's European campaign manager, said Mr Kohl's remarks left Mr Major and Douglas Hurd, the Foreign Secretary, 'with egg all over their faces'.

Mr Heathcoat-Amory reinforced the Prime Minister's statement at the Tories' daily European election press conference: 'I don't see the reality of a single European currency as being on the political horizon.'

Asked whether he thought the single currency would 'dilute the national identity' Mr Heathcoat-Amory replied: 'We would self-evidently be transferring some of our economic and financial controls to European institutions. The replacement of our national currency by a single European currency does dilute the national identity.'