No escape from EMU

That decision inevitably put the bank into play as a takeover prospect. But its governor felt personally betrayed. He had been instrumental in brokering away some of the political uncertainties surrounding Labour's home rule proposals and felt it was a time, above all others, when Scotland's financial community needed to stick resolutely together.

The tongues were soon clacking, accusing Sir Bruce of letting emotion cloud his professional judgment and, worse, effectively inciting predators to scale his fortress on the Mound. In the event, no bidder emerged, the shares were widely spread across the market and the bank hasn't looked back since.

Now, ironically in the week when Standard Life and its biggest rival Scottish Widows appear to have relaxed their previous hostility to constitutional change, Sir Bruce has spoken out again, this time on European monetary union. One week before a General Election in which Europe has emerged as a late but significant issue, the Bank of Scotland governor is warning that, if preparations for EMU proceed as planned in 1999, the project could eventually ''blow Europe apart''.

I can see no obvious party political intent in his intervention. Both the Tory and Labour parties cling to versions of ''wait and see'' or ''negotiate and decide'' which are barely distinguishable. Indeed, as the polls pick up signs that John Major, more by accident than design, has begun to mine a productive seam of Euro-scepticism in the public at large, Tony Blair's pronouncements on the issue are growing more sceptical by the day. So Sir Bruce isn't pushing any distinctive party line, despite Michael Forsyth's attempts yesterday to dragoon the banker into his cause.

Nor is Pattullo guilty of an off-the-cuff outburst. The bank has been giving serious consideration to monetary union for some time, notably in a private one-day seminar last year, where former Scottish Office mandarin Gavin McCrone delivered a masterly paper, recently published by the David Hume Institute. Another speaker that day was Dr Norbert Walter, chief economist and head of research at Deutsche Bank.

So we must conclude that Sir Bruce's intervention on EMU was carefully calculated. But designed to achieve what? You could interpret the governor's cynicism about the ability of one European central bank to determine a set of economic policies, capable of meeting the aspirations of 370 million ethnically, culturally, and socially diverse people, as a plea to scrap the whole idea of monetary union before it gets a single day older, taking him well beyond the ''negotiate and decide'' stance of the party leaders.

But curiously, despite his cynicism about whether EMU can ever be made to work, Sir Bruce seems content to play for delay. ''I think it will happen one day but that it should be postponed,'' he says. The reality is, of course, that a leading Scottish banker has no more power than leading British politicians to engineer even a delay in EMU's launch.

That simply isn't in the gift of anyone on these islands. It hasn't been since John Major won the Maastricht opt-outs. Whatever British Government emerges on May 2, the dynamic that is shaping EMU is where it always has been, on the axis linking Bonn and Paris. Helmut Kohl's decision to stand again as German Chancellor and Jacques Chirac's decision this week to call a snap election in France are both clear signs that the first day of 1999 remains the preferred target of those states who are making the real running on EMU.

That is not, of course, the end of the story. Kohl still has to persuade the German people to swallow some bitter fiscal medicine to help meet the convergence criteria at the same time as he is trying to persuade them to grant him one more term in power. And Chirac, despite the massive majority he takes into the French elections, must confront both the legacy of that tight referendum result on the Maastricht Treaty, the increasingly Euro-sceptic noises coming from the Socialist opposition, and the growing power of Jean-Marie Le Pen's National Front on the right.

But there is palpable determination still in the German and French governments, and in a group of other member states stretching from Ireland to Austria, to push ahead with the single currency project on the existing timetable. It was always clear there is sufficient flexibility already built into the terms of the key debt criterion - government net borrowing at or below 3% of gross domestic product - for what critics call ''a fudge'' to be deployed to decide who does and doesn't qualify.

Indeed Wednesday's spring forecasts from the Commission in Brussels, suggesting 13 of the 15 existing members states are already on course to qualify on that central debt criterion, are further evidence that, barring major outbreaks of popular resistance, like defeat for Chirac in the coming elections, the first wave of EMU is still on the cards for 20 months from now.

Despite the ''wait and see'' stance of the two main parties here, there is now practically no chance that Britain will participate in the first wave. Gordon Brown has already pledged New Labour to a series of key economic tests on top of the formal convergence criteria which are as good as a No to 1999. In any case, it is hard to see where the popular majority is for a referendum decision to join at a later stage.

But that won't stop seven or eight other EU member states going ahead, provided Kohl and Chirac can steer their governments to the starting blocks. If they do and EMU works tolerably well for a period thereafter, one can foresee growing hostility to Britain's freedom to let sterling float against the new euro.

But even if Sir Bruce is right and a premature EMU project blows up in its participants' faces, the knock-on effects on Britain, in terms of disrupted trade and markets, could be equally dire. In or out, there's no escaping some serious consequences.