COMMENT:Second thoughts on a single currency

FEuropean Monetary Union is temporarily off the public stage but the debate is gathering pace in the privacy of corporate headquarters and business lunches. The common sense contributions to the debate from Kenneth Clarke and Eddie George a few weeks ago discussed the practical details of monetary union. As companies have begun to think about these, the costs of the single currency have come into sharp focus while the benefits remain as vague as ever.

For the banks, there has been dawning horror at the realisation of how costly the process of transition to a single currency will be. This will be particularly onerous if, as the Governor of the Bank of England suggested, national currencies survived in parallel to the new single currency for a while.

Even without the nightmare of two sets of notes and coins, the banks will bear a big burden of adjustment. If nothing else, monetary union would probably give a huge stimulus to banking technology aimed at further reducing the use of cash.

Non-financial businesses have so far, on average, been neutral to positive about a single European currency. Although smaller businesses are more hostile, the bigger firms surveyed by the CBI last autumn gave monetary union a cautious vote of approval.

Their answers might well be different now. There is still confusion about the details, but the broad economic costs are beginning to be better understood. Mr George spelt them out: less freedom to adjust to shocks that hit the economy, the risk of permanently high unemployment in peripheral countries, the possible need for a bigger European budget to allow fiscal transfers between countries.

So the early enthusiasm for EMU among the business community has begun to fade. The strongest impulse in favouris the fear of being left out and later joining something we had no part in shaping. A repeat of the Common Market saga, in other words.