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Friday, 26 May, 2000, 11:30 GMT 12:30 UK
Prodi's euro comments baffle Britain
Romano Prodi
Prodi's comments cause a stir in UK political circles
The British debate over joining Europe's single currency has been thrown into confusion following comments that the UK could adopt the euro only to ditch the currency again at a later point.

Romano Prodi, president of the European Commission, told the Spectator magazine that in "exceptional circumstances" eurozone members could withdraw from the single currency and issue their own currencies again if it was done in a way "not ... hostile to the European Union".


rolls of 1 euro coins
Eurozone countries gear up to introduce euro coins and notes
He acknowledged that there were no treaty provisions for withdrawing from the single currency, but said it would be possible just as "Texas might leave the dollar".

Ruth Lea, head of policy at the euro-sceptic Institute of Directors, called Mr Prodi's remarks "extraordinary" and "unhelpful".

The new chairman of the London Stock Exchange, Don Cruickshank, said he was "surprised to hear him [Prodi] making such remarks" as they were contrary to the relevant treaties governing the single currency.

'No trial membership'

Mr Prodi's spokesman, meanwhile, tried to play down the remarks, saying there was no question of "trial membership".

He added that "there is absolutely no question of anyone withdrawing".

The debate comes at a time when the UK public - and large parts of the country's press - grow increasingly hostile to the single currency.

The weakness of the euro against most major currencies has hardened opposition to euro membership.

In his interview Mr Prodi acknowledged the "bias" of the UK public, but predicted that Britons would eventually warm to the euro.

Mr Prodi said: "It will be like the Common Market. You were against it for a long time. Then, in one weekend, you decided: 'These terrible Continentals are boring, but they sell and buy a lot.' Maybe you will change your minds like that again."

Out of step

For the UK, the debate about the economics of euro membership is now focusing on the issue of convergence, whether the British and eurozone economies are moving in the same direction.

The UK government, which wants to join the eurozone "in principle", has made the move dependent on such "convergence".

According to Ms Lea, however, the UK "business cycle remains madly adrift from Euroland".

"If you look at German, France and Italy, ... if you look at unemployment, on output gaps or whatever criteria you use, it is quite clear that we are not convergent with them. Under those circumstances the idea of going into Euroland and have the same interest rates would be economically extremely disadvantageous."

As long as convergence was not achieved, joining the single currency would cause economic instability, Ms Lea added.

Ms Lea is expected to make these points to a Treasury select committee later on Friday.

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