Major sets new conditions on single currency

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The Independent Online
John Major last night issued a stark warning that a single European currency could "tear the European Union apart" if it was introduced without the right economic conditions.

The Prime Minister also disclosed that the Government would stipulate new criteria that would have to be met before Britain would join a single currency.

But in a speech that trod a fine line between the opposing wings of his party Mr Major, in effect, rejected the Euro-sceptics' demand that he go into the next election with a manifesto commitment to rule out a single currency.

Mr Major reiterated that if others went ahead with a single currency in 1996 or 1997 "we wouldn't be with them". But, he added, "nor can we accept a pre-judgement - one way or the other - about some unknown time in the future. The right for our parliament to take the decision it wants when it wants is undoubted." Unless economic conditions were right "a single currency would tear the European Union apart". For the first time, he said the right conditions did not mean only the Maastricht criteria on budget deficits, public borrowing and inflation. Those were "a necessary but not a sufficient condition to justify a single currency", he said, adding that Kenneth Clarke, the Chancellor - one of the Cabinet's strongest advocate of a single currency - would spell out the extra conditions required next week.

Mr Clarke's speech to the European Movement on Thursday is expected to reflect last week's warning from Eddie George, Governor of the Bank of England, that differences in productivity and wage growth could bring long-term unemployment in some regions under a single currency.

Ironically, Mr Major's new stand takes him in some respects nearer to Labour's position. Both Tony Blair, the party leader, and Robin Cook, shadow Foreign Secretary, have underlined that Labour wants conditions beyond those in the Maastricht treaty to ensure that a single currency does not produce permanent long-term unemployment.