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In the dog days of the summer, when the nation’s politicians were well-embarked on their three-month break from the trials of Parliament, Michael Portillo sent a small but unmistakeable signal to his Euro-sceptic following, reminding them that a decision on British participation in the single currency would have to be taken “quite soon”, as he put it.

Portillo did not enlighten those who saw this interview of how he defines either “quite” or “soon” but his words were taken by the press at least as an indication that Cabinet opponents of monetary union are steeling themselves for battle.

But for all the posturing of Portillo and his ilk there have been few signs that the leaders of either government or official opposition are yet ready to confront head-on the EMU question that will soon have to be settled one way or the other.

With an election now barely more than six months away and the final verdict on EMU required soon afterwards, neither John Major or Tony Blair look likely to budge from their studiedly neutral stances on the question.

They are adamant for ambiguity, solid for flexibility, committed only to their lack of commitment.

This is scarcely a satisfactory state of affairs. Few more fundamental decisions have confronted our leaders in recent times. And seldom has less leadership been shown. Meanwhile uncertainty grows and business nerves jangle. No-one is saying that either Major or Blair must wake up tomorrow and pronounce that Britain will (or will not) take part in monetary union.

The implications are too immense to expect instant judgement. But neither man has even begun to explain to the country the full criteria which will inform the decision that they reach, to give a clear indication of the direction of their thinking, or to stimulate an informed debate.

It is doubtful how long this fence-sitting posture can remain comfortable for either main party leader during an election campaign – especially one where the media and marginal forces like Sir James Goldsmith’s Referendum Party will want to press the point. Still, for the moment, there they sit.

Meantime a new consensus has emerged that EMU will almost certainly proceed among a core group of countries by its target date of 1999. Many of the EU’s 15 member states will have failed to achieve the vaunted Maastricht convergence criteria in time. But this obstacle is unlikely to prove insuperable.

The Franco-German axis remains the main driver and the determination of Chancellor Kohl and President Chirac to forge ahead cannot be understated.

All this leaves British industry, and its financial managers more than most, with an unenviable set of problems. Business in the UK is finally alive to the challenges EMU might bring, whether Britain is in or out.

But planning for either contingency is made not only more difficult but considerably more expensive by the uncertainty factor. French or German firms, at least, can assume that if monetary union goes ahead their governments will be in the vanguard.

Some British groups have made clear their view that they can still stall for a time before laying detailed groundwork for handling a single currency.

Many of those which are not greatly exposed to overseas trade or currency transactions are relatively unfazed while some of the firms which feel they have flexible systems in place which will cope. Others, however, are not so sanguine. The technical issues raised by the introduction of the Euro are, after all, diverse. They span not only treasury questions and accounting issues but the legal arena, computing, pensions and even marketing.

One of the most interesting questions may turn out to be the future denomination of shares. If Britain opts not to join the single currency, major corporations will have to consider carefully whether they will want to be quoted on a Euro-denominated market on the Continent.

Financial directors will also want to examine the handling of contracts spanning any transition to the Euro – notwithstanding reassuring noises from the European Commission.

But it is in the financial sector that the implications are most profound.

Recent weeks have brought warnings of the potential damage continuing equivocation over EMU could do to the City’s pre-eminence as a financial centre. The Foreign Banks and Securities Houses Association, the voice of 180 financial institutions in London, has called for an early decision while the Corporation of London has said the City’s dominance is being jeopardised. For those organisations and others a casus belli has been provided by a dispute over Target (the Trans-European Automated Real-time Gross Settlement System).

After French and German officials called for access to Target to be restricted for EU countries which remain outside the single currency,City suspicions have been fuelled that jealous European eyes are trained on London business and are intent on using the Euro to steal it off to Frankfurt or Paris.

Certainly there are dangers that if the UK did not join in EMU restrictions on using Target would put London banks at a competitive disadvantage to their Continental rivals. None of these issues are lost on the politicians, and we can expect EMU to remain high on the political agenda in coming weeks.

Unsated by Major’s pledge to hold a referendum if the Cabinet decides to join a single currency, Euro-sceptics will be once more pressing the Prime Minister to go further. Ruling out Britain joining in the first, 1999, wave of EMU participants would, the sceptics will argue, give him a clear message to take to the electorate and put Labour on the spot.

But any such move would also lose the Prime Minister his Chancellor and those at the top of the government are emphatic that the current Cabinet truce is as immovable as the sceptics are implacable.

On the Labour side too there are certainly those who would like to rule out any early British participation in EMU. The sceptic-leaning shadow foreign secretary, Robin Cook, is seen as sympathetic to the view of a number of backbenchers that monetary union is liable to force a Labour government into an economic straitjacket. But that is not the position of Blair or Brown, who are not interested in delivering economic goals by such means as competitive devaluations.

So neither government nor opposition is likely to climb down from the EMU fence before the election – painful though their perch may be. Struggling to plan for all contingencies, the best course for business is to watch carefully to see on which side they are liable to fall.

Gary Duncan is economics correspondent of The Scotsman.

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