Europe bets on single currency

Britain can stay out of monetary union if it wants, but by 1999 seven c ountries will be using ecus

WALK into an Amsterdam cinema five years from now, and the chances are you will buy your ticket not with guilders but ecus. Go to the Munich beer festival, and the waiters will expect payment in ecus, not in marks. Skiing in Grenoble, buying chocolates in Bruges or sightseeing in Vienna - it will all be done in ecus, not in today's national currencies. For whatever the British government might have to say about it, a single European currency is almost certain to becirculating at the start of the next century - albeit in no more than seven countries.

An era of change is dawning in the European Union that will transform the western half of the continent as profoundly as the eastern half was transformed in 1989. That change is coming whether or not Britain chooses to be part of it, and the result will be an EU that looks very different from the present loose union of 15 countries.

The most important change will be the creation of a single currency and of supranational political institutions to accompany it. This is likely to happen not in 1997, the earliest date envisaged in the Maastricht treaty, but in 1999, the second target date, because two years from now not enough countries will meet the treaty's conditions for forming a single currency.

The new political institutions will not mean the emergence of a European super-state governed from Brussels, or a federal United States of Europe, but they will mean considerable pooling of sovereignty by those countries involved in monetary union.

One possibility is a council of ministers, and a parliamentary authority, made up of delegates from individual countries according to the size of their populations. They would supervise economic policy in the single-currency area, but leave important powers to national or local governments.

Inevitably, many EU states will be left out of these arrangements, because they lack either the economic strength or political will to be part of them. According to a senior French government source, France believes that seven countries - Austria, Belgium, Finland, France, Germany, Luxembourg and the Netherlands - will be able to go ahead with monetary and political union.

Some European Commission officials say Ireland is a likelier candidate than Finland. But they agree that Britain and Denmark will not initially take part, having secured opt-outs under the Maastricht treaty, and that economic weakness will exclude Greece, Italy, Portugal, Spain and Sweden for the time being.

The EU may therefore have an inner core, dominated by France and Germany; a middle section, led by countries such as Italy and Spain that aspire to the inner core but must wait for economic reasons; and an outer skin, possibly consisting of Britain alone. By 2001, a fourth and fifth layer will probably take shape, made up of new EU members - the Czech Republic, Hungary, Poland and Slovakia - and EU applicants such as Cyprus, Estonia, Latvia, Lithuania, Malta and Slovenia.

European central bankers, including Hans Tietmeyer of Germany's Bundesbank and Eddie George of the Bank of England, have warned that monetary union is a complicated process that could cause immense political upheaval and economic damage if not thoroughlyprepared in advance. The bankers insist that any country joining a single currency must fulfil the strict conditions on budget deficits, national debts, interest rates and inflation stipulated in the Maastricht treaty.

Mr George, speaking in Paris last week, added that the EU should not be deluded into thinking that monetary union was feasible in the long term just because Europe's current phase of economic growth was helping certain countries to meet the Maastricht conditions. Major structural differences separated Europe's economies, and "it would be very dangerous to move to monetary union in these circumstances", he said.

What this ignores, however, is the overwhelming will for monetary and political union among politicians in France and Germany. They take the view that this momentous project has become essential now that Germany is united and the EU is poised to admit a group of relatively weak countries on Germany's eastern borders.

French politicians, in particular, say that containment of German power and of national European rivalries - two of the motives behind the foundation of the original European Economic Community in 1957 - cannot be guaranteed if EU institutions are left as loose as they are now. The only answer is monetary and political union among those countries with the necessary political commitment and economic strength.

Any British attempt to veto the project, and to turn the EU into a simple free-trade area, is doomed to failure, EU officials say. It would merely prompt the "inner core" countries to sign a new contract among themselves for monetary and political union.

However, the EU's evolution into an onion-like organisation of cores and skins will not occur without arguments. One serious flashpoint may be Belgium.

Perhaps the most ardently integrationist country in Europe, Belgium is virtually guaranteed a place in the "inner core" for political reasons. But economists say it is unlikely that Belgium will meet the Maastricht criteria for a single currency even by 1999.

The treaty allows an exception for countries deemed to be approaching the Maastricht targets, but if Belgium receives favour-able treatment in this way then countries excluded from the "inner core", notably Italy and Spain, will be furious. They could seek to block internal EU reform on a host of other fronts - as Spain did recently, when threatening to delay the accession of Austria, Finland and Norway unless it won its way on fishing rights. The Bundesbank and German parliament may object if the Maastricht rules are bent too much to suit Belgium. In the end, however, the political momentum behind monetary union is so strong that, if the ecu fails to make its debut about 2000, it may be counted as the biggest political disaster of post-war western Europe.

News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features playground gun massacre
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Travel
travel
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations should be regarded as an offensive act
News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
people
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Morrissey pictured in 2013
people
Sport
sportVan Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Life and Style
Martha Stewart wrote an opinion column for Time magazine this week titled “Why I Love My Drone”
lifeLifestyle guru Martha Stewart reveals she has flying robot... to take photos of her farm
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

VB.Net Developer - £40k - Surrey - WANTED ASAP

£35000 - £40000 per annum + competitive: Progressive Recruitment: .Mid Level V...

Digitakl Business Analyst, Slough

£40000 - £45000 per annum + Competitive Benefits: Progressive Recruitment: Dig...

Mechanical Estimator: Nuclear Energy - Sellafield

£40000 - £50000 per annum + Car, Medical, Fuel + More!: Progressive Recruitmen...

Dynamics NAV Techno-Functional Consultant

£50000 - £60000 per annum + benefits: Progressive Recruitment: An absolutely o...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices