Date is set for EU currency merger

Europe's finance ministers have taken a crucial step on the road to the single European currency, by agreeing at the weekend that the rates at which German marks, French francs and other currencies joining Economic and Monetary Union will convert to Euros, will be announced next May.

This will bring forward a key piece of the EMU jigsaw by eight months and will sharply increase pressure on Britain to finally decide whether to join the common currency during the first wave in January 1999.

The move is a pre-emptive strike against potentially damaging market turbulence once the list of countries qualifying for EMU is announced in May, and reflects a growing political determination to ensure that the single currency starts on time.

In talks at the Luxembourg spa resort of Mondorf-les-Bains, ministers agreed the identity of the first batch of EMU entrants and the conversion parities to apply from 1 January 1999 will be announced simultaneously. This is what brings forward a major piece of the EMU jigsaw. "From the time of the announcement we will de facto have a piece of monetary union in place," said Hans Tietmeyer, the president of the Bundesbank.

It had always been assumed that the announcement on exchange rate parities would come only on the eve of the EMU starting date, when currencies will be irrevocably locked.

Yves Thibuult de Silguy, EU commissioner for monetary affairs, predicted the early announcement would enhance the credibility of the EMU timetable by warning financial speculators that their scope to gamble on likely conversion parities between May 1998 and January 1999 will be limited.

How the rates will be determined remains unresolved. The likeliest option is to use central rates within the EU's currency grid, the ERM.

The weekend's important and highly symbolic decision, coupled with improving prospects for economic recovery in France and Germany, mean hopes are higher than they have been for months that a delay in the EMU timetable can be avoided.

Britain therefore faces intensified pressure to step up preparations for the impact on both sterling and business of a Euro launch in less than 16 months time.

Gordon Brown, the Chancellor of the Exchequer, repeated at the weekend that the Government is committed to keeping Britain's options open. But his approach to the talks, significantly more constructive than that of the Tories, have fuelled speculation in Mondorf that Tony Blair's government is positioning itself for early second-wave membership if EMU is seen to be working.

Mr Brown announced in Luxembourg that the Government wants a "vigorous debate" in Britain on the preparations for EMU, to warn business and consumers that "in or out" they will be affected. This recognition from the British government that EMU is no longer in doubt was being seen by some EU diplomats as further evidence of a significant shift in the British attitude.

Britain's more positive strategy is partly influenced by the fear that the United Kingdom could be politically sidelined as EMU-participating countries, led by the French and Germans, start to collaborate more closely on a wide range of economic policy issues from 1999.

France appeared at the weekend to retreat from its earlier demands that the Euro be run by an "economic government", though officials believe an informal structure of "in" governments, separate from EU finance ministers, is inevitable once the Euro is launched.

Ministers are already taking the first tentative steps towards co-ordinating taxation, which is seen by France and Germany as indispensable after the single currency. At Mondorf, they authorised the European Commission to draw up detailed proposals for a code of conduct to iron out the discrepancies between tax systems which allow EU governments to bid against each other for foreign investment and jobs. Competition to lure companies through cut-price corporation tax is being blamed by Brussels for the rise in employment taxes and social security contributions, and the effect that has in killing jobs.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex A new study has revealed the average size - but does that leave men outside the 'normal' range being thought of as 'abnormal'?
Arts and Entertainment
TV
Voices
The Palace of Westminster is falling down, according to John Bercow
voices..says Matthew Norman
Sport
Steve Bruce and Gus Poyet clash
football
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
News
Graham Norton said Irish broadcaster RTE’s decision to settle was ‘moronic’
TV
Arts and Entertainment
Jake and Dinos Chapman were motivated by revenge to make 'Bring me the Head of Franco Toselli! '
arts + ents Shapero Modern Gallery to show explicit Chapman Brothers film
Arts and Entertainment
Kurt Cobain performing for 'MTV Unplugged' in New York, shortly before his death
music Brett Morgen's 'Cobain: Montage of Heck' debunks many of the myths
Life and Style
life
Sport
Brendan Rodgers
football The Liverpool manager will be the first option after Pep Guardiola
News
Amazon misled consumers about subscription fees, the ASA has ruled
news
Arts and Entertainment
Myanna Buring, Julian Rhind-Tutt and Russell Tovey in 'Banished'
TV Jimmy McGovern tackles 18th-century crime and punishment
Arts and Entertainment
Paul Whitehouse as Herbert
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Lettings and Sales Negotiator - OTE £46,000

£16000 - £46000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Home Care Worker - Reading and Surrounding Areas

£9 - £13 per hour: Recruitment Genius: This is a great opportunity to join a s...

Recruitment Genius: Key Sales Account Manager - OTE £35,000

£25000 - £35000 per annum: Recruitment Genius: Have you got a proven track rec...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn