Italy fails first test to join single currency

EMU membership: European Commission says 13 countries, including Britain, will make the grade

The European Commission yesterday declared Italy unfit to join the single currency, based on present economic forecasts, causing sparks to fly in Brussels and creating political ructions in Rome.

The row over Italy's failure so far to make the Euro-grade gave a foretaste of the bitter divisions which will break out across Europe when the final rulings on which countries qualify to join the single currency are made next year.

Prior to release of the data, the Italian government, headed by Romano Prodi, who has staked his future on bringing Italy into the single currency at the launch, was widely reported to have exerted pressure on the Commission to alter the figures. Emma Bonino, the Italian commissioner for consumer affairs, protested vigorously over the Commission's findings.

On other fronts, however, the Commission's outlook was suprisingly optimistic. Figures showed that a total of 13 countries - including Germany, France, Britain and Spain - will meet the key economic test, which requires countries to bring their public deficits down to 3 per cent of gross domestic product.

This was many more than indicated by separate forecasts yesterday from the International Monetary Fund. In its view, seen as far more realistic by the financial markets, France, Germany, the UK and Spain will also just miss the 3 per cent target.

There is slower progress on the reduction of debt in the Commission's forecast, but it clearly believes its optimistic new growth forecast of 2.4 per cent for this year will help most countries turn the corner.

Both Spain and Portugal are also expected to make the grade, although many analysts predict that it would be politically impossible for Europe to refuse entry to Italy, a founder member, while accepting Spain and Portugal.

Yesterday's Commission figures were awaited with unprecedented interest as the deadline for decision-time on economic and monetary union draws nearer. Decisions on which countries qualify will be based on economic figures for this year, and will be made at a special council by heads of state and government in May next year, ahead of the launch on January 1st 1999.

Britain, which is expected to have brought its deficit down to 2.9 per cent of GDP this year, is now highly likely to qualify, unless other states continue to insist that the requirement to be part of the exchange rate mechanism be strictly enforced.

During the increasingly Euro-sceptic debate characterising the British election campaign, both main parties argue that Britain must continue to "wait and see" before deciding whether to join EMU at the launch, giving the electorate the impression that decision-time for Britain still lies some way off.

However, as yesterday's announcement in Brussels reaffirmed, most other member states are already lining up at the starting gate.

Under the Maastricht Treaty, Britain must notify its partners of whether it wishes to be considered for membership of the EMU by the end of this year.

Any suggestion that Europe is "fudging" the convergence criteria in the final months will be seized on by British Euro-sceptics as further grounds to stay outside and will also spur conflict between other member states.

Yesterday Yves Thibault de Silguy, the economic commissioner, rejected suggestions that there had been any "tinkering or trading" with the figures, and presented his experts' findings as proof that Europe was now "well on the road" to the EMU launch.

However, supsicions about the way the Commmission has calculated its forcasts remain. Yesterday Mr de Silguy was challenged to justify how the Commission could have produced such a long list of qualifiers, in view of more cautious economic forecasts, from other expert bodies.

IMF world forecast, page 21

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
filmPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
News
Katie Hopkins makes a living out of courting controversy
people
News
General Election
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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: Office Administrator

£14000 - £18000 per annum: Recruitment Genius: An Office Administrator is requ...

Recruitment Genius: Sales Executive - Commercial Vehicles - OTE £40,000

£12000 - £40000 per annum: Recruitment Genius: Due to expansion and growth of ...

Ashdown Group: Senior PHP Developer - Sheffield - £50,000

£40000 - £50000 per annum: Ashdown Group: Senior PHP Developer position with a...

Recruitment Genius: Operations Leader - Plasma Processing

Negotiable: Recruitment Genius: An Operations Leader is required to join a lea...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders