Leading Article: EMU: out of the seminar, into the street

The single currency is just around the corner, and it looks as if Europe is finally waking up to the fact. Across Europe, the signs of strain are evident as the real implications of moving to a single currency for Europe show up - political, economic, social, diplomatic and financial implications that go far beyond what most people had imagined. Debates that have been rumbling along in one form or another the past half-decade are suddenly starting to converge. The effects of moving towards a single currency are not coming next year, or next century, but right now. In fact, demonstrably, they are with us this week.

Let's look at those converging debates. The first is the discussion between governments and central banks over the terms and conditions under which monetary union can take place. Yesterday, the European Commission decided that France could use an accounting fudge to get its public-sector accounts into shape for EMU - to the unhappiness of several other EU members, including those in Britain who fear for the effects on our economy if we do eventually decide to join.

The second debate is within governments, within national political parties, about whether to join. The Labour Party has become much firmer and more explicit in its views over the past few days, with its own muted brand of Euro-scepticism stepping to the fore, while frontbenchers start to stake out their position. The Government also looks as if it is winding up for a more decisive position statement. Much the same is happening throughout Europe. Those countries that can join are having to work out whether they want to; those that want to are having to decide if they can. In Italy, Spain, Portugal, Ireland, Belgium and indeed everywhere on the Continent, that means making political decisions that will split parties and governments.

The third area of controversy is essentially social, but flows from the economic consequences: what will be the impact of joining, or even trying to join, if it means years of fiscal austerity? Lord Healey's dire warning of riots and mayhem, made in the House of Lords, referred explicitly to the example of France, where austerity has already brought people out on to the streets, and will do so again. Unemployment in France shot up to 12.6 per cent in September, a massive leap, leaving the prime minister, Alain Juppe, even more concerned for his political future than he already was.

All of these are alarm calls, signals that the seminar phase is over, and the political phase is underway. The ordinary people of Germany and France are registering their disquiet about the effects of preparing for the single currency, and in four or five months the British electorate will do the same.

Even in the City the onward march of the euro dominates strategic planning: where questions of pension liabilities, conversion rates, computer systems, exchange-rate exposure, trading systems and the location of trading facilities are all under active discussion. The previously arcane question of what instruments a future European central bank will use is now a real battle between Britain and Germany. Jobs, money, politics and diplomacy make a combustible mixture.

Here, it is easy to have the impression that every significant issue of controversy has already been aired; but that is not really the case. The costs and benefits of joining will only really become apparent over the next few months, as the last pieces in the jigsaw are assembled. Monetary union is going to happen: whether we are inside or out, the consequences will be enormous. There will be no status quo ante to hang on to.

Of course, we are well accustomed to the positions held by those who have fought within the Conservative Party over recent months. That proper argument has now been stilled, but it cannot remain under a lid for very long. More intriguingly, this week, we are starting to get a smell of the emergent opinion within the Labour Party, that the first tranche of entry to the single currency should be viewed as anyone who joins in the first few years - that seemed to be what Robin Cook was proposing at the weekend, and also Margaret Beckett subsequently. That might prove to be a good ruse, and not only for the British - in essence, to accumulate entrants over the first few years, but regard them all as first-starters. Whether the French and Germans will go along with it, though, may be doubted.

The caution that Mr Cook and his friends demonstrate is well founded. There is much that we still do not know about monetary union, about its politics, its economics and its practicalities. But we must stay aware that the debate in Britain is lagging some years behind events in Europe. We have failed to get to grips with monetary union until now. There is a desperate need for the issues to be thrashed out; we cannot afford to have them silenced by party leaderships that fear seeming divided during the run-up to the election. Indeed, the election should in great measure be about this, the biggest decision Britain will take in the second half of the Nineties. But there are supporters and opponents of monetary union in both major parties. The Conservative leadership's fragile compromise with its sceptics, and the desire of Labour's leaders to appear contrastingly more Euro-positive, has obscured discussion. The new signals from Labour are to be welcomed, because they show that the debate is now moving from the level of rhetoric to practical commitments.

To those who have been immersed in Maastricht and all that since 1990, the arguments are already well rehearsed. But that is not the point. The most significant lesson so far from the monetary union argument is that little of this is understood by those whom a single currency will affect - consumers, workers, citizens. The indications in France and Germany are that the political elites have been running ahead of the voting population - that voters are only now turning round and protesting at the effects on them of tightening public spending to come in line with the demands of a new central bank. How much further behind, then, are the British public? Going ahead without the people's understanding and consent is a huge risk, but that is precisely what is being planned in Brussels, Bonn, Paris and elsewhere. It is a risk that those governments seem ready to take; it is a risk that has not yet been contemplated here. We have a campaign starting. We have to make sure our own political elite does not duck the question.