Euro tests dismissed as 'irrelevant'

Duisenberg's comments are likely to enrage Britain's eurosceptics

BRUSSELS, Belgium (Reuters) -- European Central Bank Governor Wim Duisenberg on Thursday dismissed Britain's self-imposed economic tests for joining the euro as irrelevant.

His intervention will inflame eurosceptics who are likely to make euro membership a key issue in a general election campaign widely tipped for next year.

Britain's official policy is that a decision on whether to join will be taken early in the next parliament, subject to a national referendum and five economic tests being met. These include economic convergence with the eurozone as well as the effect of joining on jobs and investment.

But giving testimony in front of the European Parliament's Economic Affairs Committee, Duisenberg said they were "somewhat different" from the requirements as set out under the Treaty of Maastricht.

"And it is only the Maastricht criteria which I regard as relevant for eventual entry of the UK into monetary union," Duisenberg went on to say.

"When the time is ripe it will be on those criteria that the ECB will write a conversion report as a help for the ultimate judgment to be made by the political authorities."

He also stressed that there could be "no derogation" from the rule that countries join the European exchange rate mechanism (ERM) -- which involves pegging a currency to the euro -- for two years prior to entry.

Duisenberg's intervention comes at a tricky time for Britain's ruling Labour government, which has struggled to maintain a united front on the euro of late.

Former Labour leader and European Commission vice president Neil Kinnock said in an interview released on Thursday that Britain could be in the euro or well on the way to joining within five years.

In the article due to be published on Friday Kinnock told The Spectator political magazine that despite current euroscepticism, Britain was on track to join the ailing EU currency.

But some cabinet members, such as Chancellor of the Exchequer Gordon Brown, wish to play down the country's euro ambitions because of a general election campaign likely next year.

Others, such as Foreign Secretary Robin Cook and Northern Ireland Secretary Peter Mandelson, are arguing that unless the government makes a strong case for euro membership, the general public will never be won over.

The single currency's ailing performance since its launch in 1999 has exacerbated public opposition to ditching the pound, with recent polls showing up to 70 percent of Britons do not want to sign up.

And the requirement for ERM entry has long been seen as a problem for Britain, whose ignominious exit from the original ERM in 1992 -- famously dubbed "Black Wednesday" -- would make it extremely difficult for the government to sign up to it again.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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