By Russsell Hotten

Eurostar, which runs passenger services through the Channel Tunnel, is talking to British Midland and other airlines about offering joint air-rail ticketing between London and Paris and Brussels.

Sir Michael Bishop, chairman of British Midland, said he had been in talks with European Passenger Services, the British arm of Eurostar, since last August. He has forecast airlines will face intense competition from Eurostar for business travellers.

Tim Walden, British Midland's industry affairs manager, said yesterday: “We are looking at a link service, with the hope of bringing something in some time in the summer.”

The aim would be to offer businessmen flexible packages enabling them to travel by rail or air in each direction.

British Airways is also thought to have been approached by the project, and Eurostar's other European partners are talking to airlines in France.

When solitude is bliss

By Roger Bootle

How does the global economic crisis affect the euro? Until recently, it was widely believed that there could be no better circumstances in which to launch the new currency, as the European economy embarked on an economic upswing. Well after the Asian crisis burst onto the world scene the official view was that Europe would be largely immune, or might even enjoy net benefits, thanks to the large fall in commodity prices.

Now things do not look so good. Yet a more strident note now resounds in European capitals thank goodness for the single currency! For all those countries which have managed to clamber aboard the good ship euro, even the worst weather should hold no fears. But heaven helps those casts adrift in these tempestuous seas.

In one sense, this is extremely surprising. After all, when there is more danger of a world slump than at any time since the 1930s, the time hardly seems right to be launching the greatest monetary experiment in history. Yet even a dyed-in-the-wool sceptic like me has to say that if monetary union were to be postponed now (and the chances are next to zero) the consequences would be disastrous. Italy, for one, would surely find itself at the mercy of investors running for cover. Recent caution would be nothing in comparison. Italian interest rates would soar and this could land the country in the situation aptly described as the debt trap, from which the escape is overt or covert default.

Assuming that the world economy continues to be subject to extreme turbulence, would Britain also find life more bearable if she joined the euro? Britain is not in the position of Italy. If the world crisis intensifies, the international markets will not stage an attack on British bond markets. Indeed, Britain currently enjoys safe-haven status. Nor does this derive from the notion that the pound is really a euro in waiting. It derives simply from the comparative health of Britain's economy and her political stability.

In some eyes, this attraction is even enhanced by detachment from the euro. Accordingly, Britain's danger from being left outside is the exact opposite of Italy's, namely the risk that international capital could find the pound so attractive that it was sent sharply higher on the exchanges, thereby intensifying recessionary forces already at work.

Yet outside the euro we would have the option to manage our monetary policy to our advantage. The euro-enthusiasts have long told us that this idea harks back to the days of yore. Monetary sovereignty is now illusory. Far better to recognise this and to march in step with the big boys.

Then, every so often, something comes along which puts a premium on flexibility. In the early 90s that something was German reunification. In the economists' lingo that was classed as an asymmetric shock, calling for different policies in countries which were differently affected. Supposedly, such asymmetric shocks are a dying breed – although it looks to me as though the Russian imbroglio may affect Germany far more seriously than Britain. But even if the world crisis affects the countries of the ED in identical ways, it is still hitting at different stages of the economic cycle, and there is still the scope to choose to react to it differently.

How is euroland likely to react? There are some early worrying signs. Herr Tietmeyer, President of the Bundesbank, recently dashed hopes of an internationally co-ordinated interest rate cut. And, of course, euroland has the problem of its "tiger" economies, which are crying out for higher interest rates. Moreover, there is the danger that obeisance before the god "credibility" will oblige the European Central Bank to give excessive weight to the euro money supply. All in all, there is a serious risk that euro interest rates will be held higher than they should be, thereby holding back the European economy.

Britain is in a unique position. The pound can either be seen as a pseudo dollar or a pseudo euro. If the world economy develops adversely, and especially if the dollar weakens into a strong euro, then it is in Britain's economic interests that the pound be seen as a pseudo dollar. In that case, it would come down sharply against the euro, thereby helping to mitigate the adverse effects of the world slowdown on British trading performance.

Of course, the manipulation of currency values is not ordinarily in the gift of politicians – let alone the double manipulation of moving the pound down against one currency while maintaining its value against another. But entry or non-entry into the euro is not an ordinary event. It is one of those things which is ultimately under the politicians' control. Britain is able to influence the exchange rate of sterling, not only through interest rate policy but also by taking a less positive stance about the prospects for British entry.

Until recently, of course, the Government's attention has been devoted to much higher things, namely the historic opportunity to manoeuvre Britain into the European mainstream. Let us hope that it has not lost sight of something equally historic, namely the threat of losing the ability to control our own monetary affairs at one of those moments when it would be not only useful but invaluable. Apparently, if and when we join the euro, the Queen's head will not appear on our notes. Yet if we were to join and this proved to be a disaster, then we should surely call for someone else's head – but not to go on the notes.