The euro's rise is too fast for comfort

For months, it has been an axiom of all discussion on the issue that a stronger euro would be a key to allowing Britain to join the eurozone more easily. While the euro sagged against other currencies, that discussion stayed hypothetical. But now the euro is rising, up nine percent against the dollar since May and at its highest value against the pound since 1999. The euro is now heading for a one-for-one parity with the dollar that seemed impossible only a few weeks ago. So is this the big economic break that supporters of the euro have been anxiously waiting for?

Not yet it isn't. The changes are better understood as a fall in the dollar, caused by concerns about the state of the US economy, than they are as a rise in the euro, brought on by any optimism that Europe's recovery is solidly based. While a controlled rise is desirable, this one may be happening too fast for European comfort, especially in Germany, where a rise in export prices could bring layoffs just when Chancellor Schroder, facing a tough election, does not want them.

It is ironic that the euro is strengthening just as the polls show the British public getting more hostile to British entry. That probably owes more to mistrust of government, to Labour dithering on the euro, and to a jubilee-fueled patriotic mood, than to anything else. Yet if -- and it's a big if -- Europe's economies can absorb these exchange rate changes, we will be entering a new and more promising phase for making the case for Britain to join the euro.

-- The Guardian, London