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Monday, 16 September, 2002, 09:54 GMT 10:54 UK
Lamont delivers euro warning
Norman Lamont on 17 September 1992
Norman Lamont pictured the day after Black Wednesday
Former Chancellor Norman Lamont has warned that joining the euro risks producing the kind of problems the UK experienced on Black Wednesday.

Ten years on from the day the UK crashed out of the European Exchange Rate Mechanism (ERM), Lord Lamont said the difference was that the UK would not be able to leave the euro.

The decision to join the ERM was too much driven by political considerations

Lord Howe
Former chancellor
By contrast, pro-euro campaigners are trying to "nail the myth" that the euro is the same as the ERM.

In a pamphlet to mark Black Wednesday's anniversary, Britain in Europe claims the euro would prevent such a crisis happening again.

The group argues that fixed exchange rate schemes like the ERM are doomed to failure because they can be destroyed by currency speculation, unlike a single european currency, which locks in financial stability.

Cause of Tory turmoil?

Lord Lamont rejected suggestions that the ERM debacle was responsible for the Conservatives' back-to-back election defeats.

The Treasury building
The Treasury says it does not intend to join the ERM again
Even in 1997, opinion polls suggested most people saw the Tories as the best party for economic competence, he told BBC Radio 4's Today programme.

The former chancellor said Black Wednesday was an international crisis, with many other countries suffering the same experience as the UK.

Future reaction

Lower inflation had now made the British economy more stable, he said.

"But the British economy probably reacts to external events differently from other countries in Europe," he argued.

"It's not enough to be the same, to be convergent.

It's not enough to be the same, to be convergent

Norman Lamont
"You've got to be certain the economy will react in the future to other events in the same way.

"I don't think that can be proven and I think going into the single currency carries very similar risks to the situation we got into with the ERM."

The anti-euro No Campaign claims the UK would be forced to re-enter the ERM before it could join the euro, under the terms of the Maastricht Treaty.

It points to a newspaper interview last year with Gerassimo Thomas, the European Commission's economic affairs spokesman.

Mr Thomas said: "If the British people decide to seek membership of the euro, they will have to abide by the treaty criteria, which include joining the ERM."

'Scare tactics'

But Britain in Europe argue any attempt to railroad the UK into the ERM will be fiercely resisted by the Treasury.

A spokesman for Britain in Europe said: "The anti-Europeans' favourite scare story is that Britain will have to rejoin the ERM if we become a euro country.

"That story has been rubbished by the Treasury, which has said 'we have no intention of rejoining the ERM'."

In the new BiE pamphlet, former Conservative Chancellor Lord Howe explains why he believes the euro is different to the ERM.

"The decision to join the ERM was too much driven by political considerations and too little based on careful assessment of economic factors," Lord Howe writes.

'Delay warning'

He said the process of deliberation underway at the Treasury should ensure that Britain joins the euro when the time is right.

But he added: "This must not be used as an excuse for endless prevarication".

"Staying out for lack of political courage when the economic conditions are right would be just as damaging to our national interest."

Last week, Chancellor Gordon Brown repeated his pledge to complete his five economic tests for UK entry to the euro by June next year.

If the tests rule in favour entry, Tony Blair has promised a referendum.

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Former Chancellor Norman Lamont
"Black Wednesday was part of an international crisis"

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16 Sep 02 | Business
15 Sep 02 | Business
11 Sep 02 | Business
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