Britain faces rebuff over its single currency plan

 

Britain's bid to join a new "euro club" designed for single currency member states faces a rebuff at talks in Brussels today. The Chancellor of the Exchequer, Mr Gordon Brown, will be told that even observer status is out of the question because of German opposition to "outsiders" taking part. On the table are plans which will effectively create a two-tier economic Europe, with the formation of a so-called EuroX group of nations to discuss single currency matters in the run-up to the changeover and thereafter.

Four countries, Britain, Sweden, Denmark and Greece, will retain national currencies as the other 11 move ahead with the euro at the start of 1999 when the final list of single currency members is declared early next year.

From then on the EuroX is expected to meet alongside the regular meetings of all 15 finance ministers, which will continue to tackle general economic policy issues.

But Britain fears the "inner circle" will gradually usurp the powers of the full 15, with the government's influence weakened by being on the outside.

Last week French efforts to placate Britain by allowing the UK observer status at EuroX were cold-shouldered by Germany, leaving Mr Brown fighting an uphill battle at today's meeting.

The Chancellor has promised to "protect Britain's interests", but German Finance Minister Mr Theo Waigel says the rest cannot stop the single currency members convening separately if they wish.

And French Finance Minister Mr Dominique Strauss-Khan has told Britain: "You can't have a voice in a group which is supposed to manage a currency which is not your own currency".

Nevertheless the Frenchman has been working behind the scenes to try to guarantee Britain some form of "observer" place at the table - a proposal scuppered at private meetings of officials from EU finance ministries last week.