Bundesbank Casts Gloom over the Euro

Article excerpt

Byline: ANDREW SPARROW

THE credibility of the European single currency took a battering yesterday as Germany's Bundesbank cast doubt on the way it is being set up.

It singled out the European Commission decision to let Belgium and Italy join as particularly rash.

The Bonn Government had hoped the bank's report would reassure the German public.

Instead, it complained that 'high government debt' in countries taking part could jeopardise the whole project.

The Bundesbank is one of the most respected institutions in Germany and its verdict will be a bitter blow to Chancellor Kohl's hopes of persuading his people to support his Euro campaign.

The report claimed that only five members of the European Union had achieved 'a fiscal position that can unreservedly be classified as being sustainable'.

Two of those - Britain and Denmark - have refused to join the single currency in the first wave in 1999.

The other three are Ireland, Finland and Luxembourg - the Bun-desbank excluded Germany and France from its review.

The report was a response to the European Commission decision this week that 11 countries should be allowed to join EMU, even though some are well outside the convergence criteria.

It came out as a new poll showed public opinion in Britain is hardening against the single currency.

Although countries joining the Euro scheme are meant to have public debts of less than 60 per cent of national wealth, Belgium and Italy both have debt figures more than twice as high. …