Mr Waigel's comments - intended to assuage German fears about the loss of the Deutschmark - will bolster Conservative Euro-sceptic claims that Britain, if it decides to join a single currency, would be forced to cede powers over tax and public spending.
The remarks could strengthen the hand of the Tory right, which wants the Prime Minister, John Major, to rule out British membership of EMU in the run up to the election. But the Chancellor, Kenneth Clarke, speaking after a meeting of EU finance ministers in Ireland, made his clearest declarations to date: EMU was going to happen, and Britain ought to be part of it.
"I get the feeling ever more clearly that it is going to go ahead. We are contemplating the creation of a Euro zone inside the EU in the next three or four years," the Chancellor said. Asked whether Britain would suffer discrimination if it did not join the projected 1999 launch, Mr Clarke said: "I think the single currency could offer prospects of stability, low interest rates, and a zone of economic conditions which attract inward investment and stimulate growth of trade."
However, Mr Clarke insisted that if Britain entered the single currency, there would be "no question" of handing powers of tax and public spending to Brussels. Britain would reject any attempt to override "the normal parliamentary procedures of independent nation states, which is what we are going to remain", he added.
Mr Waigel's comments suggested that the true picture would be, at least, blurred. Both men were speaking after ministers had agreed the principle of a "stability pact", under which countries inside EMU would be fined if they let their budget deficits rise above the agreed levels. Should a country's deficit rise above the 3 per cent level suggested in the Maastricht treaty, the country would have to submit a revised budget for the approval of an EU "stability council", which might be made up of finance ministers of single-currency countries. Should that country not correct its finances within a year, it would face a sliding scale of fines.
Mr Waigel said for the first time that the rules of the "stability pact" must be "legally binding". He said Germany would insist that if a member state failed to comply with the rules, other countries could take it to the European Court of Justice in Luxembourg.
MrClarke agreed to the principle of the stability pact, arguing that it would be to the advantage of countries inside and outside the Euro zone to ensure economic and budgetary discipline continues.
Nine months ago, political will on the continent appeared to be weakening, amid growing public antipathy towards the single currency, brought about largely by painful budget cutting and fears for growing unemployment. There were fears that France - or even Germany - might not meet the 3 per cent budget deficit rule in time for a 1999 launch. Helmut Kohl, the German Chancellor, was demanding greater political union as the price for sacrificing the mark.
In Dublin, however, the mood appeared transformed.Predictions of growth brought renewed hope that meeting the Maastricht convergence criteria might not be such a struggle after all. Furthermore, it became clear that Europe's leaders will be prepared to interpret those criteria "flexibly".
The European Commission signalled that it would agree to a French manoeuvre, aimed at cutting the deficit in 1997, with a one-off payment of funds from France Telecom. It had been widely predicted that Germany would view the diversion of funds as a "fudging" of the economic criteria. However, Mr Waigel said in Dublin he had no objection.
Preparations have already been made for construction of a new exchange rate mechanism for countries which do not qualify for entry in the first phase.Reuse content