THE GREAT EMU DEBATE The continent warms to the idea
Tonight Kenneth Clarke spells out the Government's criteria for a singl e European currency
Thursday 09 February 1995
Economic prospects are improving. This matters because Economic and Monetary Union (EMU) was designed to ensure only healthy economies could join the single currency. They must meet - or come close to - a series of economic criteria. In 1996, a majority of states must meet them if they are to go ahead.
Politically, interest has also revived. France, which currently holds the presidency of the EU, has repeatedly stressed that it wants to go ahead in 1996. Germany is more reluctant. The country fears that its strong currency risks being given up for a weaker one, the Ecu. Bonn would probably rather wait until later in the decade.
There are three main categories of countries. First, there are the ready, willing and able. That is a pretty small constituency at the moment, including only Luxembourg and Ireland.
Germany will meet the criteria when the time comes - union cannot happen without it. Austria will follow. France will make the grade, and is keen. The Dutch government is committed to membership - it alone kept a tight link to the Deutschmark in 1993. Its economy will be in shape for 1997, though the population is increasingly sceptical.
There is a second camp of eager but unable. Belgium's massive government debt will, however, probably be overlooked for political reasons. Finland could also squeeze in. Italy may not be so lucky, and the government in Rome is terrified it will be put inthe slow lane. Spain is also unlikely to be ready in 1997, and it is similarly concerned, as is Portugal. Greece stands no chance.
Then there are the doubters. Pre-eminent amongst them,of course, is Britain, which has a water-tight right to decide later whether it will join. Denmark, however, shares Britain's suspicions and has an opt-out. Sweden also has its doubts. Even France mayneed a referendum.
Britain would have the support of some slow-lane candidates in pressing for a decision to be put off. It would also have their support - and, ironically, that of many socialists - in pressing for unemployment to be considered, too.
But France will resist this strongly - it wants a decision, and soon. Germany will object to anything that seems to ease the economic criteria. But the real acid test will be whether German Chancellor Helmut Kohl is willing to undertake the massive exercise in public relations required to persuade his citizens that monetary union should take place.
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