Chirac and Kohl fight to revitalise EMU timetable

Fleeing economic despondency, market turmoil and mounting labour unrest at home, President Jacques Chirac of France came to Bonn last night to seek reassurance from the leader of Europe's largest economy.

For once, President Chirac and Chancellor Helmut Kohl did not disguise the nature of the visit. What had been pencilled in as a routine working trip turned into an anguished discussion about the ever worsening prospects for European Monetary Union.

Despite the two leaders' avid determination to banish any doubt that EMU will arrive on schedule in 1999, the money markets continue to bet against the project starting on time, just as public misgivings on the Continent are growing.

The markets seem convinced that France will not fulfil the Maastricht criteria in time. The franc has been under attack throughout the summer. A German interest rate cut last month offered only brief respite.

Unfortunately for France, there is little more help that Chancellor Kohl can offer. Bonn is itself in serious danger of exceeding the 3 per cent budget deficit allowed under the rules. Cuts are being prepared to salvage next year's budget but the patience of German workers is running out. Unions have erected a stall opposite the government quarter in Bonn demanding "Jobs and social justice".

Quietly, even Bonn is softening its stance on EMU, ditching demands for a "stability pact" that would penalise profligate member states within it. The markets are wondering whether the target date of 1999 might be ditched next.