UK to join euro 'soon'
Duisenberg: We need the UK, the UK needs us
The President of the European Central Bank has said he believes Britain will join the single currency sooner rather than later.
Wim Duisenberg's interview with the BBC's Jonathan Charles in full
Wim Duisenberg was interviewed on BBC2's The Money Programme.
The UK Prime Minister Tony Blair has continually insisted that his government is keeping an open mind on the subject.
His line has always been that the UK will sign up to the euro if and when it is in Britain's interest to do so.
Will everyone cheer if the UK enters the euro?
Now, the man charged with managing the European Union's central bank, Mr Duisenberg, says he believes Britain will join up to the single currency.
Mutual benefit
In his first interview since the launch of the euro on 1 January, Mr Duisenberg said: "I think it [the UK] will join. I hope it will join and I hope it will join sooner rather than later.
"We need Britain and I think Britain needs us."
In a wide-ranging interview, Mr Duisenberg put forward reasons why the UK should be part of the single currency.
Britain's status as a trading nation will be enhanced by membership, he said.
"If you do away with the exchange rate for almost - in the case of the UK - one half of your international trade, that will be of enormous benefit to the people and industry and the service sector in the United Kingdom."
The quest for convergence
But Mr Duisenberg warned that Britain would have to work hard to bring its economy into line with the rest of Europe.
Duisenberg: Does not always listen to politicians
He said: "You would have to harmonise your economic developments, and you would have - in order to make it credible for the exchange rate to be irrevocably locked to the euro - you would have to prove, not a in a formal sense but to demonstrate, that the developments in your economy have been brought more or less in line with the rest of the area."
Mr Duisenberg's remarks highlighted some of the concerns the UK has in joining the euro, in giving away power to set interest rates to the European Central Bank, in Frankfurt.
Mr Duisenberg made it clear he intends to resist calls from politicians for lower interest rates in euroland despite fears of a recession.
He intimated he will stick to clear monetary and fiscal policies and will not indulge in decisions which may give political quick fixes.
Mr Duisenberg said: "The tension is always there, whether it is from finance ministers from this or that country. I might almost say I'm used to that tension, to pressure. And I'm also used to withstanding that pressure."
Mixed signals
As to whether Europe was heading for a recession, Mr Duisenberg said the matter was still unclear.
He went on: "We see industrial confidence and industrial production slowing down. On the other hand we see consumer confidence, retail sales remaining at very high levels.
"We expect some slowdown and we also expect a pick-up in the economy towards the end of the year.
"If there were signs of deflation then the lowering of interest rates would be justified, but we are not there yet."
|
