Meanwhile, in Germany, public opinion is also moving against measures being taken to meet the deficit requirement for 1 January 1999. Gradual budget adjustment, rather than one-off measures, is vital for sustainable convergence. Both Germany and France have opted for one-offs: the French government in making a shady deal with France Telecom; the German government in opting to revalue its gold reserves.
This new situation offers two possible scenarios for the launch of the euro:
1) A fudged EMU, starting on time on 1 January 1999, in which countries take measures which are unsustainable and which ultimately run into problems with the Stability Pact.
2) Postponement of EMU for up to one year to encourage a softening of the fiscal "run-in" to meet the Maastricht criteria, and at the same time allow the revised fiscal adjustments to combine with firm economic plans aimed at job-creation.
European leaders must revise the EMU timetable. If they don't, there will be a fudged EMU on 1 January 1999 with key member states holding budgetary positions which are unsustainable. An emphasis on employment measures coupled with a smooth run-in to monetary union is better than a rushed and deflationary entry which could all end in tears.
MARK HENDRICK MEP
(Lancashire Central, Lab)
The writer is Labour Spokesperson on Economic and Monetary Affairs in EuropeReuse content