Bruton urges action on euro entry rate

The Fine Gael leader, Mr John Bruton has called for the pound to enter the single currency at a rate of 2.50 deutschmarks to the pound and has urged the Government not to wait until the May meeting of the Council of Ministers to set the entry rates for the euro.

The pound is currently trading at DM2.53 and its median rate within the current exchange rate mechanism is DM2.41, the rate at which the Government is expected to seek for Irish entry to the euro.

Speaking on RTE's This Week programme yesterday, Mr Bruton said: "The Government is currently a spectator, allowing speculators to set the value of the pound. That's not as it should be. The Government should look for an early meeting of the Council of Ministers to lock rates at which all participating countries will enter the euro within the next month.

"We can't wait until May, If we do wait it will be speculators and not Governments who will decide exchange rates."

Asked at what rate Ireland should enter the euro, Mr Bruton said: "DM2.50 is the exchange rate I would set."

But Irish Exporters Association (IEA) has called on the Government to resist calls for the revaluation of the pound.

"Any such move would be a serious mistake and would make the temporary overvaluation of the Irish pound a permanent feature of our economic fundamentals," said IEA chief executive Mr Colum McDonnell.

Meanwhile EU Finance Ministers today begin their final countdown to the launch of the euro with an open debate on the British Presidency programme and a closed, potentially more divisive, discussion on the ever improving Italian convergence figures, and by implication its suitability for euro participation.

The meeting of Ecofin in Brussels is also likely to discuss the procedures for appointing members to board of the European Central Bank, notably concerns by Ireland and some of the smaller member states that the six positions should be shared out in such a way as to allow small countries to aspire to occasional membership.

The question of who will be the bank's first president - hotly contested between France's Mr Jean Claude Trichet and Holland's Mr Wim Duisenberg - is unlikely to be resolved.

But compromise proposals under which Mr Duisenberg might only serve half an eight-year term are likely to be discussed informally.

And, diplomats say, Ireland's exchange rates are unlikely to be discussed - with the Irish rate comfortable at only 2.5 per cent above the central Exchange Rate Mechanism rate - as ministers would be reluctant, officials say, to prompt speculative market movements. The outspoken Dutch Finance Minister, Mr Gerrit Zalm, known as more German than the Germans on monetary issues, was reported recently by a Dutch paper as having threatened to resign if the Italian currency was admitted to the first wave of the euro.

Mr Zalm denied the report, but not entirely convincingly, and today's meeting will see a first meeting since the report between him and the Italian Finance Minister, Mr Carlo Azeglio Ciampi. Mr Zalm's reservations notwithstanding, there has been a growing sense of acceptance here that Italy will be part of the first group.

Through a combination of special taxes, privatisations and spending cuts, the country's budget deficit has fallen from 6.8 percent of GDP at the start of 1997 to 2.7 per cent by the end of the year, provisional figures released last week indicated.

That is comfortably below the Maastricht 3 per cent target and likely to be better than France or Germany.

But although the Union's Monetary Committee accepted the Italian convergence programme last week, some doubts were raised about the sustainability of the deficit position in 1998 as some of the Italian cuts were once-offs.