ALL the technical arrangements necessary for the introduction of EMU on January 1st, 1999, as scheduled are now in place. So Alexandre Lamfalussy, the outgoing president of the European Monetary Institute - forerunner of Europe's new central bank - told MEPs. The new central bank will be in a position to operate the currency as from day one and, if there are any delays, this would be on account of the politicians.
As far as the convergence criteria of the Maastricht Treaty were concerned, he felt genuine progress had been made in the member states. Public deficits on average were falling from 6.5 per cent a number of years ago to 4.4 per cent last year. He was optimistic of reaching a figure in the 3-4 per cent range this year.
There was no doubt that genuine convergence and monetary stability had been achieved, he said, with inflation now running at below 2 per cent in all member states except one. His two concerns, however, were over the high levels of unemployment and the lack of progress in reforming public finances.
Reductions in deficits had been achieved either by an increase in taxes or cutting expenditure. There was still a need to tackle those areas that accounted for the largest amount of public expenditure, such as pensions, social security and health.
On the controversial Stability Pact and the desire of the French government to inject a stronger commitment to tackling unemployment, Commissioner Yves-Thibault de Silguy said he detected "a greater willingness to co-operate in the areas of co-ordinating economic and monetary policy and monitoring employment policies". He underlined his belief that the Euro would eventually improve the job situation, and pointed out that those countries which had reduced their deficits the most were now enjoying higher growth rates. As he put it: "Public deficits never create jobs."
MEPs voted to endorse the current timetable for EMU but with a "flexible" interpretation of the convergence criteria. As Lyndon Harrison (Cheshire West and Wirral, PES) pointed out, flexibility on interpretation of the criteria was already built into the Maastricht Treaty.