Buoyant Italy says it is ready to rejoin ERM

In a last-minute sprint to the starting line of European monetary union, Italy served notice yesterday that it would rejoin the exchange-rate mechanism (ERM) within a week, and vowed to meet the Maastricht criteria laid down for participants in the new currency.

"Italy intends to be one of the founding members of EMU," proclaimed Carlo Azeglio Ciampi, the country's Finance Minister. Speaking at a European banking conference in Frankfurt, he added: "Italians are determined to do everything necessary to be an element of stability and not an element of tension or distortion".

Mr Ciampi said the lira,forced to retreat from the ERM in 1992, would be back in the fold "in November", thus meeting one of the three main conditions for EMU membership.

On the other conditions, public debt and budget deficit, Rome is also very close to attaining the targets - frighteningly close in German eyes. Italy's budget deficit is forecast to stand at 3.3 per cent of gross domestic product in the qualifying year of 1997. Under normal circumstances, that would have entitled the Germans to slam the door in Mr Ciampi's face, but the 0.3 per cent overshoot is likely to be no worse than Bonn's performance.

The Bundesbank and the German parliament have reserved themselves the right to vet all applications, confident that the "Club Med" countries would sink under the weight of their own abysmal statistics. Now Bonn is having to find new excuses to keep out those it does not trust. Chancellor Helmut Kohl, the top speaker at yesterday's Frankfurt event, shifted the emphasis to the less scientific concept of "long-term stability".

Emboldened by Germany's failings, former no-hopers are pressing their claims. Spain joined the vanguard yesterday with a confident prediction that the peseta would be in the hard core from the beginning.

The Club-Med's progress towards fiscal rectitude is in stark contrast to the profligacy of the two countries that are driving European integration. Germany has been temporarily knocked off course by the slow-down of its economy, but for France there appears to be no end in sight for economic and political turbulence.