Tuesday, December 8, 1998 Published at 10:07 GMT
The parties and the single currency
Britain may be staying out of the single currency, but as the BBC's Political Editor Robin Oakley explains, the single currency certainly isn't staying out of British politics.
The Labour government has declared itself in principle for the single currency. But it has said that it will not join until there has been a suitable period to assess the effectiveness of EMU.
It has set five key tests:
The Government, like the other parties, is pledged to hold a referendum on any decision to take Britain into a single currency. A government determined to win a second full term simply will not take the risk of a referendum campaign on such a tricky issue in the run-up period to the next General Election. Failure in such an enterprise could be the beginning of a downward spiral .
And there is one other key issue: many of Britain's newspapers, notably the Sun and the Mail, but including the Times and the Telegraph, are strongly opposed to British membership of the single currency. Mr Blair and his colleagues do not want to alienate them before the election.
In the meantime that leaves the Labour Government with a problem. It is difficult to live up to its early rhetoric about "leading in Europe" and forging a far friendlier relationship with the European Union than the previous Tory administration while staying outside Europe's biggest single project.
Ministers are already nervous that Britain has lost clout at European negotiating tables. Mr Blair has been trying to counter this by engaging in other projects designed to burnish his government's pro-European credentials, such as the agreement with Spain to press for flexible labour markets and the agreement with France to give the European Union its own defence capability.
A further problem for the Government is that the pound has been pushed to levels which make life uncomfortable for British manufacturers and exporters by financiers hedging against European uncertainties. And some Euro-sceptics within the Labour party warn of the dangers in joining a high unemployment zone policed by a European Central Bank with responsibility for inflation but not for output or employment.
Mr Hague insists, unlike Tony Blair, that there are grave constitutional implications in joining a single currency and he has argued that joining EMU could be like entering a burning building with no exits. But that is not enough for some in his party, who would like the Tories to declare against the single currency in principle.
The disputes over the line on the single currency have seen serious sniping at Mr Hague from former leading figures like Kenneth Clarke and Michael Heseltine and the resignation from his Front Bench of Stephen Dorrell, David Curry and Ian Taylor. It has also distanced the Tories, who are seriously strapped for finance, from a large sections of the largely (though not exclusively) pro-single currency business community.
The Liberal Democrats remain the most enthusiastic of the British parties for the single currency. They accuse the Government, with whom they are allied on constitutional issues, of failing to give leadership on the single currency.
They say that Britain's interests would best be served by a declaration of a target date for entry and a vigorous Government campaign to persuade the public of the benefits of a single currency which, they say, would bring cheaper transaction costs, lower interest rates, lower inflation and higher growth.