- guardian.co.uk, Sunday January 6 2002 01.38 GMT
- The Observer, Sunday January 6 2002
And the price paid? Some angry queues in Italy, some faulty cash machines in Austria, a few tales of forgeries in Ireland and costlier votive candles in a French church.
The startlingly smooth launch after 10 years of meticulous planning has caused a sigh of relief among Eurocrats from Brussels to Frankfurt, home of the European Central Bank. Europe finally got something right, and it celebrated with fireworks and laser shows across the continent.
From Portugal to Finland, record amounts of cash were withdrawn from banks by excited citizens. As financial markets judged the launch a success, the euro rose rapidly in value.
In the UK some shops prepared to accept the euro - and we started arguing. For euro supporters it was a green light to go on the offensive, with Foreign Minister Peter Hain all but declaring that Britain joining was inevitable. Lord Brittan of Spennithorne (the former Home Secretary Leon Brittan), chairman of the Conservative Group for Europe, gloated: 'For more than a decade anti-Europeans have scoffed that the euro will never get off the ground - but it has. Then they said the launch would be a fiasco - but it wasn't. They were wrong before, so why should we believe what they say about the euro in the future?'
But is it so simple? The successful launch certainly removed one obstacle to Britain joining, but eurosceptics were quick to point out that it makes little difference to the real arguments. And the bombshell inadvertently dropped by Gus O'Donnell, the Treasury's top economist, that the decision to join is political rather than economic, suddenly put the europhiles on the back foot.
The euro launch was not so much a starting gun for Britain joining, as a throwing down of the gauntlet: we can now see and feel what we are debating. Let battle commence.
In his office on the 15th floor of the European Central Bank, a floor-to-ceiling safe behind him, Antti Heinonen last week glowed with quiet triumph. The softly spoken Finn is director of banknotes and chair of the cash changeover co-ordination committee: he has planned the launch to the last detail, endlessly co-ordinating with banks, officials and industry groups in every country.
'It is an unprecedented logistical exercise. Given that there are 300 million people involved, you expect all kinds of incidents, and so far it has been surprisingly smooth,' he said. 'Already the majority of transactions in some places are in euros - on average 40%, but as many as 80% in Holland.'
In Brussels there was also a feeling of quiet triumph. John Wyles, the man who advised the European Commission on its public relations strategy for the euro, said the successful launch was no accident. 'It didn't become sexy overnight. The campaign that governments have been running in the last few months was a successful one in getting across the message that the euro was coming and creating interest, awareness and excitement,' he said. 'It is a hugely significant change in people's lives. It is a huge economic and social novelty.'
According to Bart Sturtewagen, of the Flemish newspaper De Standaard, nobody in Euroland can understand British reluctance to sign up to the novelty. 'Seen from inside Euroland, it's almost incomprehensible why anyone would want to stay out. People don't worry about Britain, but they ask themselves why anyone would want to exclude themselves from something which is clearly working. The launch was a moment of history. It was electrifying, and you cannot underestimate the unifying power the euro has. It makes Europe clearer and more tangible for people.'
Across the wintry Channel, the view is very different, as illustrated by a slideshow given to London graduates by Gus O'Donnell, head of macroeconomic management at the Treasury, and custodian of the five economic tests on which Britain's entry depends. The slide in question showed two tandems. The first - representing the British economy - showed Eddie George, the Bank of England governor, and Chancellor Gordon Brown pedalling in unison. The second, weaving all over the road, had European Central Bank chief Wim Duisenberg in front and a gaggle of European Ministers fighting behind. This represents the Chancellor's greatest nightmare: handing over the levers of Britain's prosperity to an organisation many in the Treasury regard with disdain.
What turned O'Donnell's lecture from a shared joke into a front-page story was not the pictures but his words. When asked by one student how the five tests could be 'clearly and unambiguously' met, as Brown says they must be, he said that was a question for politicians.
There was a spy in the room: a young woman who relayed his words back to the eurosceptic pressure group Business for Sterling. It was an explosive story. If Brown's cherished tests were not economic but political, then surely they were badly tarnished. Business for Sterling dropped its bombshell at the most damaging time, just as the final rollout of euro notes and coins was being pronounced a universal success.
While last week's triumph has been a feather in the cap of the European institutions, it is almost completely irrelevant to the Treasury's doubts about the ECB's ability to steer that wobbly tandem. 'We will judge this thing on what's best for Britain - this week doesn't make any difference to the British Government's position,' said one Treasury source.
Senior pro-European figures have not been slow to detect the Treasury's anxiety. They believe 'Dim Wim', as Duisenberg is nicknamed, should be persuaded to abide by a gentlemen's agreement with the French that he would leave in 2002 - four years early. 'He has clearly failed to win the confidence of the markets,' said one.
Britain's position will also evolve as events unfold following the launch. The euro is widely expected to rise in value, and this summer millions of Britons will use it for the first time on their holidays. By then, too, Euroland consumers may begin flexing their muscles, with the euro enabling direct comparisons of the cost of everything from suits to soap, forcing manufacturers to cut prices. BMW has already said it will sell its new luxury 7-series car at the same euro price tag throughout Europe. Only Britons will still have need of a calculator.
By early autumn, pro-Europeans hope the combined effect of a stronger euro, familiarity with the currency and a nodding acquaintance with its potential benefits will have softened public opinion sufficiently for a real campaign to begin.
The assessment could be announced late this year or early next, with a referendum four months later. It would take at least two years to prepare for actual entry, leaving Britain free to join in 2005 - just before Blair has to call the next election.
The stealthy march towards 'E-Day' is now well advanced. Just as many businesses are preparing to accept the euro, so are our public institutions. Every government department has drawn up strategies to handle any future switch: in the Department of Work and Pensions alone, 15 civil servants are working on preparations for transferring benefit payments and pensions into euros. Across government, more than £23m has been spent preparing for what is still officially only a potential handover.
The Treasury insists it is simply keeping British options open in case there is a decision to enter: it would be pointless the nation voting 'yes' only to discover the Government could not deliver in time. But there is another, less optimistic scenario circulating in the Treasury that chills Blairite blood. The Chancellor could make a highly encouraging assessment of progress towards the tests but announce that regrettably they are not quite met, deferring the referendum until the next Parliament.
Like every crucial decision the Blair Government has faced, the question of whether Britain joins will ultimately rest on a negotiation between Blair and Brown. With the Chancellor hovering over the hospital cot of his prematurely born daughter and Blair in Asia, there has been little time for such a conversation. But pro-European Cabinet Ministers are beginning to insist it cannot be put off for ever.
· Additional reporting: Andrew Osborn in Brussels
