German minister sees UK in euro during this Parliament
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Your support makes all the difference.A leading German politician yesterday stepped into the fight over British membership in the euro, saying the UK would join the single currency during the lifetime of this Parliament.
Hans Eichel, the finance minister, told a panel discussion in Frankfurt: "I think Britain will become a member of the monetary union and that there will be a vote during the lifetime of the current Parliament."
His intervention was undermined by a sharp fall in the value of the euro, which plunged by 1.2 per cent – its steepest one-day fall for a month. But Mr Eichel's comments could revive market speculation that the Labour government will use its re-election landslide to push ahead on joining the euro.
The pound fell immediately after the election but reclaimed its losses after Gordon Brown, the Chancellor, said the Government would not be pushed into joining before the economic conditions were right. The Prime Minister also said before the vote that the Government would assess whether the UK had met the Treasury's five economic tests for joining within two years of the new Parliament, or June 2003. This could allow a referendum that autumn, with euro notes and coins to be brought in two years later.
The pound, which has fallen 1.7 per cent against the euro this month, gained slightly yesterday against the single currency. The euro fell across the board after figures showed that French business confidence hit a two-year low in June, as firms reported further drops in orders and output. A monthly survey of 4,500 firms published by the French government's statisticians showed that confidence dropped this month to its lowest point since June 1999. The single currency fell Wednesday to $0.8495 from $0.8597.
Analysts said the European Central Bank would feel pressure to follow the US Federal Reserve and cut interest rates next week. But Ernst Welteke, the Bundesbank president and member of the ECB, said: "There is no need for further action."
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