ABSTRACT
Anyone who has followed the progress from the European Council meeting in Maastricht in December 1991, towards the creation of the European single currency, due to begin in 1999, would have been struck by the enormous difficulties that have been encountered. Indeed, on several occasions it looked as if the project would be abandoned. The key problem faced by the architects of monetary union has been the unexpectedly deep and long recession in Europe in the first half of the 1990s, which has been followed by the persistence of high unemployment in many countries. These economic difficulties have been associated with the progress towards the single currency in two ways: first, in the dramatic speculation that engulfed the European Exchange Rate Mechanism (the system of currency management within set bands established in 1979) both in 1992, when the UK, Spain and Italy were forced to withdraw, and in 1993 (when the French franc finally succumbed to the speculators); second, in the austerity programmes adopted by national governments to reduce their recession-bloated deficits to meet one of the requirements of the single currency membership. These provoked opposition in many countries, but the outcry had greatest impact in France where strikes and demonstrations erupted at the end of 1995.
