Summary:The United Kingdom is likely to adopt the Euro within five years and would provide some welcome free-market leadership to the group of 11 nations that recently joined together under the common currency, a panel of European experts said.
The British are part of the European Union but balked at abandoning the pound for the Euro under previous Conservative Party rule. Labour Party Prime Minister Tony Blair has indicated that his government is more receptive to the new currency.
"The continent would welcome the British as early as possible," said Bernd Stecher, senior vice president and chief economist of Germany's Siemens AG. "We'd like to share the British entrepreneurial spirit with the rest of the community."
Spurred by a strong service sector, British unemployment is about 6 percent -- approximately half the level of some other European nations. Some analysts said Britain's more liberal labor rules as well as privatization efforts could rub off elsewhere in Europe.
"Europe's main economic policy challenge is unemployment," said Joly Dixon, director of international economic and financial affairs for the European Commission. "Many European countries have unemployment of over 10 percent -- this is unacceptable."
Dixon predicted that economic growth for the European Union will total about 2 percent this year before picking up in 2000. Earlier predictions had pegged 1999 growth at 2.5 percent.
A wild card in the employment picture is how an expected rush of corporate combinations will affect jobs. "We will see a wave of mergers in coming months" as the Euro conquers borders and deregulation continues in industries such as telecommunications, said Juergen Mueller, senior economist at DaimlerChrysler AG.
Panelists said closer cooperation between European Union nations will make national governments less relevant. They also suggested that the advent of the Euro will carve into the dollar's supremacy as the world's currency.
"There is a revolution going on in Europe; we're just in the early stages of it," said Richard M. Young, managing director and chief European strategist for Goldman Sachs.
A dissenting voice on the panel was Henri Lepage, managing director of l'Institut Euro '92, who suggested that the currency won't be as strong as some panelists suspect, and that the common currency may not have the effect of drawing the nations together.
"The Euro will be much weaker than people think," Lepage said. "Life will much tougher than people think and divisions between countries much greater than people think."
Ted Van Dyk, executive vice president of the Institute, moderated.
