Yet the question will not go away. We should not underestimate the European drive behind monetary union. Something is going to happen. Yet the route to the euro will not be easy. No one believes a majority of EU members will be convergent by 1999. We are looking at a fudge, either on the criteria, or the deadlines, or both.
A fudge on the criteria would render the project unattractive for Britain - at the outset, at least. One of the supposed benefits of a single currency is that you import German fiscal and monetary rigour in exchange for giving up the ability to stimulate your economy by adjusting your exchange rate. No serious country should advertise devaluation as a plank of policy. But, as Britain's experience post-ERM demonstrates, it can stimulate growth within a framework of monetary and fiscal prudence.
But if a critical mass of European countries were converged beyond all argument in 1999, the British people would need to count very slowly up to 100 before saying "no". A glance at long-dated British gilts and bonds shows that markets regard sterling as a weak, depreciating currency in the long term. A hard, non-inflationary euro would take its place alongside the dollar and the yen as a reserve currency. A "no" to all that would represent a refusal to sit at a world top table predicated on our desire to retain our freedom to devalue - hardly an encouraging signal for a stand-alone economy to send out.
This is not a question we will have to face in 1997. Rather, we shall be asked to consider a minority of not-so-hard core countries moving ahead, or some ingenious device for postponement. In both cases, the correct policy for Britain suggests itself. The convergence criteria were largely authored here and in Germany. They reflect a virtuous combination of economic targets likely to produce non-inflationary growth, so we should stick to the criteria and remain within them. Notices should be pinned up in every public place: "No Competitive Devaluation Here."
If the initial hard core were to be subjected to a generous political interpretation which allowed in countries not strictly convergent, we should remain outside EMU but stay convergent with it, and only face the question of whether to join when and if it became clear the euro is the D-mark by other means. If a postponement of EMU is proposed, we should argue that compliance with the criteria should carry more weight that meeting artificial deadlines. A convergent Britain is not only sound economics but also strengthens our hand in arguments about the desirability of EMU.
There are wider political considerations, too. Most of us want the European Union to work. With all its faults the EU is a force to be reckoned with. Its role in the setting up of the World Trade Organisation under a European chairman gives us a say in setting the terms of world trade. For Britain, with 27 of the top 100 European companies, the wearing down of European trade barriers is a win/win situation. We have no interest in a botched single currency; we would not be immune from the chaos that would spread.
A seated position on the fence is not the best platform from which to lecture others. Nor is our authority enhanced by the visceral nihilism toward all things European by some of the noisier elements in our society. But the fence it has to be until we are certain that the alternative is not a bed of nails.
The writer is Conservative MP for Watford.Reuse content