Britain Delays Joining Euro-Currency Plan

The British government on Monday ruled out joining the European single currency until after the next election early in the coming century, but it said Britain should prepare to enter the monetary union soon after that if conditions appear favorable to the country’s economy.

Chancellor of the Exchequer Gordon Brown issued the government’s most definitive statement on the politically treacherous subject of monetary union after a week of criticism that he and other officials had sent confusing signals of its intentions to financial markets and its European allies. The controversy threatened to undermine public support for the government of Prime Minister Tony Blair, which has enjoyed an extended honeymoon since its election in May.

Brown sought to balance the government’s pro-European posture and its enthusiasm for the principle of monetary union--scheduled to begin in early 1998--with the reality that neither the economic nor the political conditions now exist to make it possible for Britain to participate for perhaps five years.

“Barring some fundamental and unforeseen change in economic circumstances, making a decision, during this Parliament, to join is not realistic,” Brown, whose position is comparable to treasury secretary, told the House of Commons on its first day back after an extended summer recess.

But in an effort to demonstrate that the new government is more open to monetary union than was the previous Conservative Party government, he emphasized that if the single currency succeeds, Britain almost certainly will become part of it later.

“If in the end, a single currency is successful and the economic case is clear and unambiguous, then the government believes Britain should be part of it,” he said.

The single-currency plan will begin in January, with the initial participants permanently setting their exchange rates. That will be followed by a transition period of two years for introducing the new currency, known as the euro. By July 2002, the old currencies of participating nations will cease to be legal tender.

After early predictions that eight of the European Union’s 15 member nations would initially enter the common currency, it now appears that as many as 11 might. Only Britain, Denmark and Sweden have declared that they will not join in the first wave.

Brown argued that economic conditions now preclude any consideration of Britain’s early entry. Britain’s economy, he said, is out of sync with the economies of other European countries. Interest rates here are running at about 7%, compared with about 3% in France and Germany, and it will take years for the differences to narrow, he said.