The news that the British government will take longer than many had hoped to join the single currency is not particularly good from the Irish point of view.

The major risk for Ireland is that if we enter the single currency and Britain stays out, then swings in sterling's value could have a very destabilising effect on the Irish economy. And it now seems assured that we will have a prolonged period in the new currency without the UK.

The Government has consistently pointed to the ESRI study last year on membership of monetary union. It found that even without the UK, the benefits outweigh the risks. However, a devaluation in sterling would limit the gains somewhat.

Mr Brown's announcement has also once again highlighted the risk which the Irish authorities will assume next May when they decide at what rate we will join the single currency.

If sterling remains strong and we opt to enter at a relatively higher rate, the economy would suffer if and when sterling fell back. Entering at a low rate against the other European currencies, say our current central rate of DM2.41, on the other hand, could prove inflationary if sterling remained strong.

In the short term at least the announcement will also keep sterling stronger then it would otherwise have been. Yesterday, sterling jumped to close at DM2.9195, almost three pfennigs above its Friday close at DM2.9014.

Sterling is now likely to trade on its own merits, rather than as a European convergence currency. According to Mr Jim Power, chief economist at Bank of Ireland, if Mr Brown had decided to join at the earliest opportunity sterling may have fallen back to the DM2.60 level. As a result, according to Mr Power, the pound is now likely to trade in the 89p to 91p sterling range and we will be dogged by continuing fears of revaluation until the May decision.

When the story first broke in the Financial Times several weeks ago that Britain may consider joining sooner rather than later, it was broadly welcomed by most Irish commentators. The recent clarification of this position is not a surprise but will keep our own convergence problems to the forefront.

Despite Mr Brown's caution, the sentiment in yesterday's statement was decidedly pro-European. For Ireland this can only be good news, given the Government's insistence that we will join no matter what Britain does.

However, in the longer term, the Irish authorities will be hoping that Mr Brown remains true to his word and does not pursue any competitive devaluations. Such a strategy would undermine Irish competitiveness and could put jobs at risk.

The decision not to rejoin the ERM will highlight this risk. Of course, the longer term is now longer than many would have liked. It now appears that a referendum on Britain joining will not be held until after the next British general election, which could be as far away as mid-2002.

However, he also said that there would be no time-lag between the staging of a popular referendum on the issue and British participation in the euro.

Of course, Mr Brown is right when he says to join now would create problems for Britain. Britain is in a completely different economic cycle to the rest of Europe - as is Ireland. And a decision to join early would have created great difficulties in terms of falling interest rates and currency.

"There's no realistic prospect of having demonstrated before the end of this parliament that we have achieved convergence which is clear and stable rather than transitory," Mr Brown told the House of Commons.

It would take "a period of years" for the British economy to converge with Continental European ones, he added.