THE Taoiseach, Mr Bruton, has declined to be drawn on differences between Fianna Fail and the Progressive Democrats on joining a single European currency from day one. The two parties should themselves sort out their policy on the issue, he said, but the Coalition Government's position was clear and united.

Mr Bruton said he understood there were risks involved in the decision to go in without Britain. "We shouldn't minimise those risks," he said, "but I think we should realise that we have a bigger long term interest with the continent of Europe than we have with Britain on its own.

"I also think that, ultimately, Britain will come in anyway, and I believe that being in the first wave of members will be very advantageous to Ireland because we will be the only English speaking country if Britain doesn't go in. That will help Dublin develop as a financial services centre on the western edge of the euro zone.

The Taoiseach was in Brussels for a meeting of the European People's Party to which Fine Gael is affiliated. Also present were Germany's Chancellor, Dr Helmut Kohl, and the Prime Ministers of Spain, Belgium, Luxembourg and Italy.

The meeting discussed institutional issues in the Inter Governmental Conference and the incorporation of the Schengen Treaty on passport free travel into the EU treaty.

Meanwhile, the likely next deputy governor of the Bank of England said that it would be dangerous for Britain to rejoin the EU exchange rate mechanism at the moment. Mr Gavyn Davies of Goldman Sachs stated: "To join would be a very risky thing." Mr Davies, a close adviser to British Chancellor of the Exchequer, Mr Gordon Brown, said that joining ERM at a central rate of between 2.50 and 2.60 deutschmarks would capture all the movement in sterling over the past six years.

But achieving such a level would be very hard: "First of all, getting a DM2.50 exchange rate agreed with the rest of Europe, and then keeping it within implied narrow bands would be tricky," he said.

"The Government could signal an intention to participate in EMU by rejoining the ERM, but such a move is unlikely before 1998, although the government could move more quickly."