Delay in monetary union would be `paradise lost', claims Santer

As the debate on the single currency intensified, Jacques Santer, the European Commission President warned that the plan is irreversible.

"It is now possible to state with the greatest amount of confidence that the project has become irreversible. The euro will see the light of day on the first of January 1999". In a speech delivered last night in Dublin, he said any delay in monetary union would be "paradise lost".

Implicitly directing his criticism at Britain's Euro-sceptics, Mr Santer said critics of EMU should stop fighting "ghosts" which in reality posed no threat. Dismissing the latest scare story, Mr Santer denied that people in one participating state would end up paying for pensions of citizens in others. Monetary union would prevent pension-related debt from arising, he said, because single currency countries would follow sound budgetary policies. The guarantee of that would be the proposed budget stability pact with fines for failure to observe fiscal rectitude.

Governments were already taking steps to deal with the risk of unfunded pensions which might arise with the ageing of Europe's population, for example by increasing the pension age. Mr Santer said the summit of EU leaders in Dublin next month would agree on a new currency grid linking members of the euro-zone with those economies which remain outside. The new system would be based on strengthened economic convergence.

It was already agreed that member states not entering the one-money zone from day one would submit plans de-monstrating how they intended to achieve the high degree of convergence necessary for membership.

The Foreign Secretary, Malcolm Rifkind, refused to accept last night that a single currency is irreversible. "History will decide whether he [Mr Santer] is right or wrong. There is not much point in expressing opinions on what may or may not happen. EMU depends onthe convergence criteria being met. I don't know if they will be met".

Speaking in Brussels, he insisted the stability pact would not tie Britain into an economic or political straitjacket dictated by Brussels or Frankfurt.