Recession delays monetary union timetable

THE EUROPEAN Community accepted yesterday that economic crisis is likely to force changes to plans for economic and monetary union (Emu), though there remain differences about how to react, writes Andrew Marshall.

A meeting of finance ministers was held amidst deep gloom over economic prospects for the next year. 'All delegations expressed considerable concern at rising unemployment and the growth situation,' said Henning Christophersen, EC Economics Commissioner. This has cast doubt on Emu, which requires states to bring interest rates, inflation, government debt and budget deficits into line through 'convergence programmes'.

'It is easier to implement the convergence programmes with high growth rates,' conceded Mr Christophersen. Instead debt and deficits are soaring as a result of rising unemployment and slow growth, and governments are reluctant to take the tough action required.

The EC is trying to pull together a growth initiative mixing national and Community action. But that has been held up, partly because the national element is hard to square with tough convergence programmes. The ministers agreed convergence programmes should be pushed back a year, to 1996.

'It is in the interest of everybody that these convergence programmes should not stop in 1995 but that they continue after that,' said Theo Waigel, Germany's Finance Minister. This does not mean that the third stage of European monetary union, which could start as early as 1997, would necessarily be delayed. But since a decision is due during 1996 on whether a single currency can go ahead, it puts a question mark over the timing.

Some ministers played down the postponement. 'If anything, it should make it easier for us to go ahead together in 1996,' said Michel Sapin, of France. Others felt the economic criteria might have to change, moving the goalposts rather than the timetable.

Marian Yelved, the Danish Finance Minister, said: 'The (EC) monetary committee is working on whether the criteria that apply today are the right ones.' Reforms might include easing the definition of a budget deficit.

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