IF the Republic joined EMU and Britain did not, Northern Ireland's economy could suffer a regionalised economic shock, the SDLP leader, Mr John Hume, said yesterday.

Responding to a proposal by the Fianna Fail leader, Mr Bertie Ahern, that the North should join EMU even if Britain does not, Mr Hume said that while he had not studied the idea in detail, it did raise a serious question.

"If Britain stayed out and the punt went in, Northern Ireland would be the most disadvantaged region of the UK," Mr Hume said at the annual European Finance Convention in Dublin.

"There would have to be a special arrangement," he continued.

But Mr Ahern's idea was brushed off by former Taoiseach Dr Garret FitzGerald. "It's an interesting suggestion, but it's unrealistic," Dr FitzGerald said.

The chairman of Ulster Bank, Sir George Quigley, said that because the North's trade with Britain was greater than that with the Republic, it might not be wise for Northern Ireland to join EMU ahead of Britain.

"One of the great advantages of Economic and Monetary Union is the abolition of foreign exchange transaction costs. If Northern Ireland went in with the Republic, it would in fact suddenly be taking on more transaction costs," he said.

In his address to the convention, Mr Hume said the regions should have a major part in building a new Europe. This had particular implications for the Republic, as it was the only region state in the Union.

"It's hardly an accident that Germany has been the most successful post war economy," Mr Hume said. "It is the most regionalised in Europe."

Those who opposed European evolution symbolised the world being left behind, Mr Hume said where the nation state was all powerful. "History will not be kind to those who believe that territory is more important than people. That kind of thinking led to two world wars and imperialism," he continued.

The entire of the Republic was categorised as an "objective one region for European funding, he pointed out, but the wealthy areas were now dragging the others over the threshold for funding. The Government should formally regionalise the State, along the lines of the nine IDA regions, Mr Hume said.

Dr FitzGerald, who also addressed the gathering, said that political tension and a psychological barrier had hindered the integration of the economies in Ireland.

He suggested that while Northern Ireland should remain politically part of the United Kingdom so long as the majority there wanted to, it could "share" the

Republic's sovereignty at a European level.

In effect, he added, a future Northern authority might be allowed to pick and choose on an issue by issue basis, whom it wished to be represented by in European negotiations.