More 28/11/99

THE EURO - A HOLE IN THE HEART OF GOVERNMENT POLICY.

This week was rather embarrassing for supporters of the single European currency. It hit a new low against the dollar, the yen and - whisper it ever so gently - the pound. Almost a year on from its launch the Euro is far away indeed from establishing itself as a global reserve currency to rival the dollar.

In the UK, a government previously tumpeting the need to prepare for the single currency and decide about joining the Euro has lost its voice. As the former Labour spin doctor Derek Draper puts it: "It's not even 'wait and see'. It's wait."

So what's going on? Have Tony Blair and Gordon Brown changed their minds about the desirability of scrapping the pound? The Chancellor makes much of his 'five economic tests', a series of conditions which will have to be met before the UK can join the Euro without damaging the economy.

But Lord Lawson, Conservative Chancellor during the 1980s, points out that these 'tests' are an old trick: "I think they're a useful convenience for politicians who haven't made up their minds. It gives then a respectable excuse for waiting." As for meeting the conditions themselves, that will happen, in the words of Derek Draper: "As soon as Tony Blair gets up in the House of Commons and says we're joining."

It seems that the only real test of whether we should join the Euro is public opinion. And at the moment that's against it. So the government is keeping its powder dry and trying to avoid any mention of the single currency. Very astute politically. But it doesn't give much guidance to British business. And it leaves Labour with a very similar policy on the Euro to its Conservative predecessor. Wait and see.

Greg Wood
Business Correspondent