Eurosceptics are confident not just that they have shifted the domestic political debate about Europe, to the point where British participation in monetary union is unthinkable, but that the debate on the Continent is also moving in their direction. They claim to see more and more evidence that European policy-makers, prodded by public opinion, are abandoning the ambition of launching the single currency in 1999 and may even ditch the project altogether.
Clearly, a growing number of politicians, bankers, industrialists, trade unionists and media pundits across the Continent are having doubts about whether European monetary union (Emu) can start on schedule. However, most would profoundly disagree with the notion that they have something in common with what, in their eyes, is the negative Europhobia of the English nationalist Tory right.
For example, Italy's Prime Minister, Lamberto Dini, who is one of the very few continental leaders to have expressed public concern about the 1999 deadline for Emu, nevertheless sees himself as a committed European in heart and soul. When he agreed with John Major in Florence last Wednesday that the EU must carefully study the impact of a single currency on participating and non-participating states, he was not looking for a formula to strangle Emu before it is born.
Officially, 13 of the EU's 15 states are dedicated to monetary union. In a 14th, Denmark, political leaders would like to join were it not that public opinion forced them in 1992 to obtain an opt-out clause from the Maastricht treaty deadline. Unhappily for the Tory Eurosceptics, they are less often viewed on the Continent as trend-setters than as troglodytes.
Yet it has become increasingly clear this year that the launch of Emu in January 1999 is by no means a foregone conclusion. Uncertainty about the prospects for a single currency dominate the economic and market analyses published by leading European investment houses. No one in the world of international finance and business is yet taking monetary union for granted.
It is a different story in the European Commission, whose president, Jacques Santer, recently poured scorn on the intellectual prowess of Neil Kinnock, the transport commissioner, for suggesting Emu might not happen on schedule in 1999. However, it is a reasonable guess that Mr Kinnock's only offence was to say in public what Mr Santer and others have reluctantly contemplated in private.
The chief obstacles to the single currency concern national economic policies in the EU, inter-governmental relations and public opinion. To start the project on time, most EU governments are trying to cut public expenditure and implement other austerity measures to meet the strict Maastricht criteria on low budget deficits, public debts and inflation.
No doubt many governments are running such large deficits, and are accumulating such formidably high debts in their extensive social security systems, that they would be compelled to introduce belt-tightening programmes whether or not the deadline of January 1999 was approaching. As the German government never tires of saying, healthy public finances are an objective always worth pursuing.
The fact remains, however, that it is fear of failing to meet the Maastricht targets which has galvanised governments into adopting deflationary policies at a time when millions of Europeans do not feel their countries have properly recovered from the most recent and very severe recession. Public opinion surveys repeatedly show that Europeans are preoccupied with job insecurity and what seems to be a generally precarious economic future. But their governments are pursuing policies that merely intensify these concerns.
The result in France, and to some extent in Belgium, has been the eruption of sudden and widespread social protest. In Austria, the coalition government of social democrats and conservatives was forced to resign last October when it tried to introduce budget cuts. Mr Dini's government of non-party technocrats is finding it no easier to reform the public finances.
There are grave doubts, therefore, about the price that the EU may be forcing itself to pay, in terms of political stability and social harmony, if it goes ahead with monetary union in 1999. A related point is that, since a majority of EU governments will probably fail to qualify for the single currency, Emu could prove a factor dividing the member-states among themselves.
An EU in which Germany and France formed a monetary union, but Britain, Italy and Spain stayed outside, could lead to bitter accusations that one group was putting the other at a disadvantage because of its economic policies. Emu insiders would be watching like hawks for signs that outsiders were letting their currencies slip in search of a competitive edge, while outsiders might complain that they were being forced to pay an interest- rate premium for being kept out of monetary union.
If the EU decides, next year or in 1997, that the 1999 deadline is unrealistic, financial markets will almost certainly take it as a signal that the French franc and some other currencies are overvalued. They will mark them down and pour money into the German mark.
According to many continental advocates of Emu, this could prove fatal to Europe. Postponement of monetary union, they say, would irrevocably damage the EU's single market, launched in 1993, and set back the cause of closer political integration.
It would also delay the admission of former Communist countries in central and eastern Europe. Europe would be in danger of losing its historic chance, created by the 1989 revolutions, to unite itself in peace and freedom.
But perhaps events need not take such an apocalyptic course. Failure to achieve monetary union in 1999 would represent a setback, but not eternal disaster. EU countries would still have the same incentives as now to pursue exchange-rate convergence and financial discipline at home.
The EU need not dismantle the European Monetary Institute, forerunner of the future European central bank, or tear up any of the detailed plans now being prepared for introducing a single currency. It would simply acknowledge that the Maastricht schedule was too tight for today's circumstances and it is better for Emu to start later.
For sure, postponing the single currency carries risks. But monetary union is a big idea, the biggest in EU history, and Tory Eurosceptics should understand that it is not going to disappear in a hurry.Reuse content