Many of the key issues surrounding the single currency still remain to be decided, both at European level and in regard to domestic policy. The crucial stages in preparation have now been reached at European level and over the coming months finance ministers will have to make a number of vital decisions, culminating early next year when they must adjudicate on who will be "in" and who will be "out". It is of the utmost importance that the Government has a clear view of what it wants to achieve in these negotiations and also considers the necessary domestic policy issues.
It is not certain that monetary union (EMU) will go ahead on schedule, although it appears likely that it will, and Irish policy makers are correct to plan on that basis. A forthcoming report from the National Economic and Social Council (NESC), details of which are reported in today's Irish Times, argues that the debate should not centre on whether Ireland should join but rather on how to survive and prosper inside monetary union.
Key issues certainly remain to be resolved in terms of preparing for EMU membership. The NESC report highlights the exposure of the economy here to a sharp fall in the value of sterling, assuming that Britain does not join the initial group. Ironically, the authorities are currently grappling with the opposite problem, as sterling's strength causes problems on the markets. The Government also needs to decide at what rate we hope to lock in to the single currency and how to bolster competitiveness after monetary union commences.
The preparations for Ireland would be made much easier if Britain was set to join. However, it looks increasingly unlikely that even a Labour government would join in the first group moving to monetary union in 1999. The Government here can take some comfort from the British Labour Party's more positive attitude to Europe and from the hope that this could bring sterling into the single currency soon after it commences. Certainly if the single currency project was succeeding, it would become increasingly difficult for Britain to stay out.
However, in the short term, the latest developments do not hold much comfort for Irish policy makers. Another major row has broken out in the British Conservative Party after the Foreign Secretary, Mr Malcolm Rifkind, said that on balance his party was "hostile" to the single currency. The Chancellor, Mr Kenneth Clarke, responded that this was a "slip of the tongue." But it surely was not, and Tory divisions over Europe appear to be deepening.
Perhaps of greater interest to Ireland is the news that the Labour Party is planning new "tests" to determine whether Britain should enter EMU. But, while likely to participate more fully in EU affairs, a government led by Mr Tony Blair does not now look likely to make the leap to join the monetary union in 1999.
All this underlines the need for the greatest possible level of preparation in Ireland. It is not enough that Ireland meets the Maastricht criteria for joining the single currency. We must also be ready to participate and be clear on what policies are needed to ensure continued strong growth in the economy and employment levels inside monetary union.