THE British government has put down markers that it regards decisions on the shape of, and decisions within, the single European currency to be of as much concern to those outside as those inside the euro.
In a letter to the Italian Prime Minister, Mr Lamberto Dini, who also serves as Rome's finance minister and, hence, chaired yesterday's Finance Ministers Council, the British Chancellor of the Exchequer, Mr Kenneth Clarke, set out a number of British concerns about the relationship between the "ins" and the "outs" of the single currency.
Known as "cohabitation", the issue is now the focus of studies by both the Commission and the European Monetary Institute. Mr Clarke, in a substantial preemptive strike, made clear that Britain would oppose any further budget transfers arising from the Euro, and warned that the inner group of countries could not be allowed to make conditions of application more difficult for late comers.
He also returned to Mr Major's Madrid theme of the dangers of provoking an institutional split within the Union between the advance group and the "outs".
At the meeting he also emphasised the importance of the issue "for all member states because of the need for monetary stability within the single currency".
The Minister for State at the Department of Finance, Mr Hugh Coveney, called for work on ways to secure budgetary discipline in Stage 3, in accordance with the treaty provisions" a signal of qualified Irish support for proposals from the Germans for a post EMU stability pact.
Speaking later at the launch of the Commission's round table on the publicising of the single currency, Mr Coveney insisted on the importance of getting across to citizens the fact the EMU convergence criteria "make sound economic sense in themselves. We need to keep firmly in mind that the EMU project is not a model being run for the benefit of economists . . . but to benefit citizens."
At the round table the president of the European Monetary Institute, Mr Alexandre Lamfalussy, endorsed the views expressed by several finance ministers at their meeting earlier emphasising that the slowdown of the European economy did not represent the beginnings of a recession.
He admitted that the duration of the slowdown was uncertain but reminded those present that they "should not forget that a slowdown has often been seen at the end of an initial period of expansion". The key issue was the need to restore confidence.
In his letter to Mr Dini, Mr Clarke reiterated British opposition to the creation of a new Exchange Rate Mechanism for those outside the single currency. It would, he said, be "almost bound to fail if it attempted to encompass economies which were by definition non convergent".
The letter also points to ambiguities in terms of authority over the management of interest rates between finance ministers and the future European Central Bank.
But perhaps most revealingly, Mr Clarke asks what happens if the markets accentuate the divisions between the single currency countries and those outside, making it more difficult for the outsiders ever to join? That would be particularly likely, he argued, if the "ins" introduced additional fiscal disciplines for even tighter convergence.
