There has not been sufficient debate about what will happen if Ireland joins EMU and Britain stays out, the chairman of Unilever, Mr Niall FitzGerald, has said. He also said he hoped that the British government would make a strong declaration of positive support for EMU within the next month.
Irish-born Mr FitzGerald said he would be "more comfortable" if he had evidence that there was more real discussion in Ireland of the consequence of Ireland joining and Britain not joining.
"Because, however committed a European Ireland is, and wishes to be seen to be, the economic facts are that its biggest trading partner is still the UK," he said.
Mr FitzGerald warned this could mean greater volatility of trade between Ireland and Britain. He said Ireland should join EMU anyway, but should do so with its eyes open. "If Britain is going to join soon thereafter, then it doesn't matter.
"If Britain stays out for three years, but it is clear that it will join EMU, then this will have very little effect on Ireland."
However, he said if Britain stayed out for three years and was still undecided - or had decided it might not join at all - it could lead to even greater volatility. "This is because one doesn't know what view the currency markets will take on an independent sterling.
"All the economic benefits of EMU - the predictability, lack of transaction costs, stability - all of those would apply, but not regarding the pound's relationship with sterling, so Ireland would miss out on that advantage," he said.
"I think the British Prime Minister has to make a strong declaration of intent regarding EMU, before Britain takes on the EU Presidency in the first half of next year," Mr FitzGerald said. "Otherwise he won't have the necessary authority and credibility to be able to lead it. Most of the key decisions on EMU will be taken while Britain has the presidency.
"The question which is difficult to answer is whether Britain is at a different stage in the economic cycle compared to the rest of Europe.
"If you had a converged monetary policy with lower interest rates, then there is a question whether that would be appropriate in Britain."
Mr FitzGerald, who was speaking at a press briefing after an address to the European Association of Advertising Agencies in Dublin yesterday, said that if Britain expressed a strong intention to join EMU, that in itself would begin to lead to some of convergence.
"I think then the sterling exchange rate will begin to drop and interest rates will begin to come down, slowly and not suddenly," he said.
However, he said he did not think that, in practical terms, Britain would be ready to join at the outset.
Mr FitzGerald, who is also a director of the Confederation of British Industry, said it was impossible to predict at what rate sterling would join EMU, if Britain did decide to go in. He said most industries involved in exports would be uncomfortable with a rate above 2.80 against the deutschmark.
"I think many of the countries they are exporting to would be uncomfortable with a rate below DM2.60, so you can decide yourself where it should rest."
On Ireland's economic performance, Mr FitzGerald said it spoke for itself. However, he warned that if Ireland's economic growth went much beyond 10 per cent, the economy could be in danger of overheating.
"What you need is controlled growth," he said, "as some of the Asian countries have recently found out."
