Business View; Listen to Ken. He's not as anti-euro as the Tories think

Using the forum of Central Banker magazine, a publication so specialist that you'd be hard pressed to find a regular reader in your social circle, he apparently reversed his position on being in favour of taking the pound into the euro.

Only he didn't. Careful reading by other than the feverishly anti-European editors on The Daily Telegraph reveals that this was a strategic retreat. What the former chancellor said was that the euro had, so far, not delivered what had been promised on economic stability and growth, and it was nigh on impossible to take sterling into the single currency during this or the next parliament.

Even the most fevered Europhile would subscribe to that. Taking the second point first, the political atmosphere after the French and Dutch rejections of the European constitution is such that any dramatic shift towards a united Europe has had to be put on the back burner. Why anyone is still considering admitting Turkey to the EU, when we still have to digest Bulgaria and Romania in 2007, is beyond me.

So let's consider the "failure of the euro". It is true to say that the eurozone, as a whole, has suffered during the six years that the Euro has been in existence. This is partly because of the overly tight construction of the Growth and Stability Pact that came with the creation of the euro. But it is mostly because of two factors - inflexible labour laws and German re-unification - neither of which have anything to do with the euro.

The former has prevented European countries responding as well as the UK and US did to the twin shocks of the end of the dot.com boom and the post 11 September slump. Companies such as Siemens and VW are only just beginning to adjust their employment levels to the economic realities they face.

Germany has been in slump since reunification. This is largely because of a different monetary union to the euro, the crazy idea that one old Ostmark could be swapped for one shiny new Deutschmark. Germany is the most important economy in Europe because it is the manufacturing powerhouse and, until recently, was the largest economy. If it is economic retreat, everyone is going to feel bad.

But Germany is changing. This month it has an election and the free market, low taxation CDU leader, Andrea Merkel, is likely to replace Gerhard Schröder. She could be taking over just as the German economy is showing signs of recovery. A strong Germany is good for the whole eurozone. People will start to feel better. Maybe even the Italians will stop moaning about having gone into the euro at the wrong price.

For those implacably mistrustful of the European project, the euro will remain an anathema. But for those with a more open mind, a healthy eurozone might make the single currency appear more tempting.

Should Ken Clarke win the Tory leadership battle, and should he defeat Gordon Brown at the 2008 general election, I predict that the euro will come back on to the UK political agenda. This leopard has not changed his spots.

Nirex appointment

Last week, I became a non-executive director of Nirex, the Government-owned body charged with building a repository to store nuclear waste. Just to put it in context, no decision has been made to build a repository, but a recommendation is due to come next year from the Committee on Radioactive Waste Management, which could lead to a repository being built.

Before accepting this post, both I and the editors and managers here considered whether this might cause a conflict of interest. However, as I have long held the view that a repository for nuclear waste needs to be built and have said so in these pages, we felt the risk was minimal. If serious conflicts do occur, my primary duty is to the readers of The Independent on Sunday, and I will stand down from Nirex.

j.nisse@independent.co.uk