ERM Crisis: Clarke under attack for 'I told you so' attitude: Heath criticises the Chancellor for gloating that UK's withdrawal has been justified. Anthony Bevins reports

KENNETH CLARKE, Chancellor of the Exchequer, was attacked yesterday for a display of undiplomatic gloating over the threatened collapse of the ERM when he said: 'Well, we did tell you so.'

Sir Edward Heath, who appeared to be acting as a one-man Opposition, said: 'You don't exert diplomatic influence by telling people in the same organisation, 'I told you so,' That's not diplomatic. You may think it, but you don't say it, and I hope he won't say it when he gets to this conference.'

The former Prime Minister also criticised Mr Clarke for saying that he would be going to the weekend meeting as a 'relaxed spectator', and he backed Lord Howe's call for an accelerated creation of a single currency to beat off the speculators.

Speaking before he left for the Brussels talks, the Chancellor said: 'I think we have shown that our decision to opt out of the automatic timetable towards economic and monetary union has been amply justified.

'We have always said that we wouldn't rejoin the ERM until the fault lines were corrected inside the system. I shan't obviously be making too much of this when I'm there, but I think the British Government certainly can turn round and say, 'Well, we did tell you so.'

'I think when the present discussions are over, we will be heavily involved, right at the heart of Europe, on how we actually put together sensible arrangements to give us all stability, the prospect of economic recovery and a single European market.'

That was a reference to yesterday's Treasury contribution to an EC Commission White Paper on growth, competitiveness and jobs. Summing up its message, the Chancellor said earlier: 'The UK's prescription is straightforward: get rid of the barriers to employment, get rid of the barriers to trade, encourage enterprise and the growth and jobs will come . . .

'Nobody should fool themselves that Europe can spend itself back to growth and employment. Nor can we shut ourselves off from our competitors. That will not cure the structural problems of unemployment and would simply deny exporters the boost they want from free trade worldwide. Instead, Europe has to stop pricing and regulating its workers out of jobs.'

David Hunt, Secretary of State for Employment, said: 'Our currency is stable because people have confidence in the Government's policies; confidence in the fact that inflation is now 1.2 per cent, that interest rates are the lowest in the EC, and we have record levels of exports and unemployment has fallen for five months in succession.

'What I believe our Community partners are now asking is: 'How is it that the UK economy has been able to achieve all this?' '

Sir Edward was more concerned, however, that the Government was ignoring the threat posed by the ERM crisis.

'They really must face up to the fact that this situation isn't due to markets just adjusting themselves,' he told BBC radio's The World this Weekend. 'It isn't due to people who are looking after the interests of you and me, who are consumers; it is speculators who are out to make a hell of a lot of money . . .'

Sir Edward said the single market required a single currency. 'The timetable has got to be speeded up,' he added, 'because so long as we have a mass of small currencies . . . one by one they'll be picked off again.'