It's not just Britain that's struggling to fit a single currency into the jigsaw headache

German unemployment reaches the highest level since Hitler came to power! The French far right is poised, in a mayoral election in the south, to win its first clear electoral majority! John Major and Malcolm Rifkind announce plans to export their political philosophy direct to the electorates of Europe!

It has been, on first sight, a week to delight Eurosceptics and abash Europhiles. The drive to a single currency is partly to blame for the German jobless figures; the Front National's message in Vitrolles, near Marseille, is anti-immigrant and anti-establishment, but also anti-European; Mr Rifkind intends to inform the Europeans that their leaders are secretly dragging them into a social democratic superstate.

The political jigsaw of Europe is, however, a rich and wonderful affair. It contains many more pieces than these; and pieces that seem to belong to several jigsaws. A couple of months ago it was axiomatic that France, of the likely core EMU members, would have the most difficulty making the grade, politically and economically. Unemployment was high; growth stuttering; opponents of economic reform were threatening a second winter of discontent on the streets.

Now French employment is up; growth projections buoyant; and the threat of direct action against the government has faded. All seems set fair for France to qualify for EMU by next year's spring deadline without further pain. More than 60 per cent of the French people say they favour giving up the franc for the euro.

And yet France remains in a psychotically depressed mood. The French fear their very identity is threatened by globalism, free-marketism, immigration, a sense that the qualities of Frenchness are not appreciated, or likely to succeed, in the modern world. A recent successful book by Jean-Claude Barreau is entitled France: Will It Disappear?.

Such a mood, compounded by revelations of corruption in the political establishment, is ripe for exploitation by the Front National in next year's parliamentary elections. But other French instincts - an old humanitarian instinct, a newer European instinct - remain deeply embedded in the national psyche.

It was equally axiomatic until recently that the euro was a kind of German plot: the deutschmark writ large. It was Germany that was the toughest in insisting on near-rigid observance of the Maastricht guidelines. German public spending was pushed down to show other countries the way. Now unemployment has boomed, threatening to push public spending up again. Germany seems to be trapped in a vicious spiral, just when France had stumbled into a virtuous one. More than 60 per cent of Germans oppose ditching the deutschmark for the euro.

And yet the polls suggest that Germans are resigned to EMU. As one senior official says: "Germans expect their political leaders to lead and if they are led into the euro, they will accept it without too much complaint." Maybe. In the meantime, the domestic pain will make politicians and officials even more bombastic in defending the sanctity of their interpretation of the Maastricht rules.

And what of Britain? It might seem a rather good time for Messrs Major and Rifkind to start lecturing European electorates on the dangers of dirigiste, social democratic super-states. Actually, nothing could be more absurd. If anti-EU feeling exists in France and Germany it is rooted in a fear that Europe has become too infected with Anglo-Saxon economic super-liberalism. France is having psychological difficulty coping with the single market, let alone the single currency. In Germany the tight monetary and budgetary policies forced by Maastricht are compared to the Thatcherite policies of the early 1980s. There is a widespread fear on the Continent that the EU risks dismantling social democracy, or welfare capitalism, not promoting it, that the EU has, in a sense, become too British already. Mr Rifkind's threat to take the Euroscep- tic message abroad was not aimed at the continental public. Like much of the debate about Europe in Britain, it was about British politics, rather than European realities.

Robin Cook, shadow foreign affairs spokesman, broke that mold recently. He said something sensible about EMU. To summarise his remarks: Britain is unlikely to be in the single currency from the beginning; no one can be sure if EMU will work; it might be a disaster; but if it does work it will be difficult for Britain to stay out. This was portrayed as a great political gaffe. But the president of Toyota made much the same point.

To appropriate an old US political cliche: unless you are confused, you do not understand what's going on. In Britain, which does not intend to sign up next year, EMU is the subject of obsessive, circular political debate. In France and Germany, which are the cornerstones of EMU, serious debate is barely beginning.

Efforts are being made in France to teach the public about the practicalities of the euro. Town and departements will stage experiments with fake euros in the coming weeks. When it comes to facing up to the deeper implications, the instinct in Paris and Bonn is still to prevaricate about what EMU really means.

Of course, EMU is a huge step towards a more federal Europe, which would reduce national sovereignty. But monetary policy is already slipping through the fingers of governments and central banks. Would a European currency restore some of that control? Would it increase European prosperity by lowering interest rates and encouraging trade? Would all of this be worth the undoubted loss of national control over monetary policy, and even tax policy? Can a kind of democratic oversight be welded to the technocratic apparatus now proposed? Even if the answer is yes, it remains a hugely risky enterprise.

In an excellent recent essay in Liberation, Laurent Joffrin urged his countrymen to face the realities of EMU but not to be terrified by them. EMU, he wrote, will change the "very nature of the French nation". Until now France has maintained a creative ambivalence about the EU: it has seen Europe as a screen on which to project French governmental influence and power, not a threat to it. The single currency, Joffrin argues, will change all that, forcing the fearsome French governing apparatus to learn how to share power in a network of other nations. He argues that this will help to release the creative genius of France, stifled by the present system.

The Front National and other EMU opponents on both right and left do not see it that way. It is doubtful whether President Jacques Chirac, who is, after all, the heir of De Gaulle, sees it that way. In Germany, the Bundesbank has long had doubts about EMU. Some German Social Democrat politicians are toying with breaking up the pro-EMU consensus of the governing classes. The Franco-German alliance is already being tested by EMU-related squabbles. The EMU crunch is coming; this week's events are only the beginning.

But the overwhelming likelihood is that EMU will happen. Too much is invested for the project to be allowed to fail or even falter. German employment figures are terrifying. But the medium-term economic forecast for the West is encouraging.

If the single currency fails, it could shatter the EU. If it succeeds for a few, it could divide the EU permanently. If it succeeds for the many, it will change power relations for ever. The very idea is traumatic for Britain. The reality, when it comes, will be more traumatic for the other EU countries - and perhaps especially for France - than they have so far admitted to themselves.

Neal Ascherson is away.