Britain and the euro

After much dithering and some fancy political footwork, the British government appears, at last, to be in the process of formulating…

After much dithering and some fancy political footwork, the British government appears, at last, to be in the process of formulating a coherent policy on European Monetary Union. The Prime Minister, Mr Blair, may still be fighting shy of articulating his own vision but two senior ministers - presumably with his blessing - are busy preparing the ground for a significant shift in policy.

Both the Chancellor, Mr Brown, and the Trade and Industry secretary, Mr Peter Mandelson, signalled this week that it was no longer a case of if Britain would join EMU. Rather, the issue was now when Britain would join. Both also appeared anxious to underline the possible benefits of participation in the single currency project.

Mr Brown now plans to publish a so-called "change-over plan" detailing how Britain proposes to deal with the euro when the first wave of members - a group which includes Ireland - enters the euro zone next January. The Chancellor, who is now working to ensure that the British economy does not tip into recession, has already said that the question of British membership of EMU is open, provided the economic benefits are clear. Mr Mandelson, however, was even more direct in his address to the Confederation of British Industry; "It would be economic lunacy for the sake of Eurosceptic ideology to marginalise British business on the sidelines of what should be its own market", he said.

The more positive signals about the single currency reflect business opinion in Britain. Most business leaders, according to the most recent survey, want Britain to join the single currency and a huge majority think membership is inevitable. Britain's EU partners have also been pressing the Blair government for a clear signal of intent. This week, the new German Chancellor, Gerhard Schroder, encouraged Britain to join the single currency and praised the way the British government was "cleverly plotting " Britain's entry.

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Mr Blair and his political spin doctors have, indeed, done a good job in softening up British opinion about the euro. But it is time to finally put the ambiguity about participation to one side and to adopt some definitive policy positions. If British membership of the euro zone is inevitable - as Mr Brown and Mr Mandelson suggest - the British government should, in the first instance, set some kind of target date for entry. This would end the current uncertainty and allow British business to plan with much greater precision. It would also change the whole nature of the public debate about the euro and, perhaps, boost the prospects of a `Yes' vote in the referendum on entry.

Britain's policy on the euro will be monitored very closely by policy-makers in this State. The current uncertainty about Britain's intentions has made the management of Ireland's transition to the euro zone more difficult and complex than it might otherwise have been. The hope is that the signals coming from British cabinet ministers this week indicate a new clarity of thinking.