The great euro divide

JUNE 9 is Euro-day when Chancellor Gordon Brown will tell MPs whether the UK is ready to join the single currency. Political Editor GRAHAM DINES previews three weeks of intensive Cabinet debate and lobbying from pro and ant pressure groups.

JUNE 9 is Euro-day when Chancellor Gordon Brown will tell MPs whether the UK is ready to join the single currency. Political Editor GRAHAM DINES previews three weeks of intensive Cabinet debate and lobbying from pro and ant pressure groups.

NOT yet. That's expected to be the verdict of Chancellor Gordon Brown on whether Britain has met the five economic tests he laid down as conditions for joining the single European currency.

By insisting that he had the final say, Mr Brown has effectively checkmated the Prime Minister, who is keen for the UK to join the euro zone to prove what good Europeans we are.

But Tony Blair, and probably a majority of his Blairite Cabinet, would make the choice on political purely political grounds. Given the final say, the Prime Minister next month would launch a referendum campaign urging the British people to vote `yes.'

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It won't happen. Gordon Brown's veto has stopped the Prime Minister in his tracks – which is what the Chancellor wanted all the time.

Unlike the Conservatives, this Government and the Labour Party have been much cleverer in papering over their yawning differences on the euro.

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Depicting the Tories as irrevocably split on the single currency, Labour has been able to spin its way out of its own difficulties. That will all come to a stop on June 9.

Messrs Blair and Brown may try to present a united front. But the deep disappointment that Tony Blair will feel over his Chancellor's "no" will make the relationship between the two – already fraught because of Gordon Brown's deep desire to become Prime Minister – even more fragile.

Each Cabinet minister, in the next few days, will have one-to-one meetings with the Mr Brown and Mr Blair, to discuss the issues and give their opinions on what will be the biggest political decision this country has taken since joining the Common Market in 1972.

The Chancellor will tell MPs that he is not shutting the door for ever. Tantalisingly, he could hold out the prospect of a referendum if the conditions are right before the next General Election.

But it's highly unlikely. Britain's national economic interests will be the deciding factor in the Government's judgement on whether to go for a referendum, he said at the weekend.

He left no doubt that he expected his colleagues to follow his judgment on the five tests of whether joining the single European currency would be in the UK's economic interest.

"The five tests effectively define the national economic interest for our country. It is a guarantee that we can ensure jobs, investment and the future profitability of industry and the prosperity of the country.

"People want to be sure that they have a Chancellor, they have a Cabinet and they have a Government that is putting the national economic interest first and they want to be sure that the economics and not dogma will be the decisive factor."

Mr Brown said the Treasury's long and painstaking assessment of the economic implications of the euro was "insurance" for voters that there would be no repeat of the Exchange Rate Mechanism debacle of the early 1990s, which ended with the expensive fiasco of British withdrawal on Black Wednesday.

"When we joined the ERM, nobody did an assessment," said Mr Brown. "The national economic interest was not really analysed in detail."

And he insisted: "Nobody has ruled out a referendum as an act of dogma during the Parliament."

His remarks left seething those in the Government who support entry to the single currency. They won't say publicly – but the "join the euro at any price" Liberal Democrats were no so reticent.

The party's Treasury spokesman Matthew Taylor said the Chancellor's comments had made "a mockery" of Mr Blair's pledge that the Cabinet would decide.

"It is clear that the Chancellor believes a decision on the euro will be taken solely on his assessment of the five tests. June 9 will tell us very little about the euro, but everything about who is really in charge – the Prime Minister or his Chancellor," said Mr Taylor.

European Commissioner Chris Patten warned that further prevarication would "embolden" the anti-Europe lobby and risked permanently reducing Britain to the status of "whingers in the back row."

The key issue was not the five economic tests but the role Britain wanted to play in the European Union, the pro-euro Conservative former Cabinet minister argued.

Mr Patten is at odds with the bulk of his own Tory Party, whose leader Iain Duncan Smith will present the Government's dithering as a real sign that it is split from top to bottom.

He has challenged the Government to hold a referendum now – believing, as all the opinion polls suggest that the electorate would vote "no."

Yet before the Tories too cocky, it is the Government's very dithering that has, in effect, saved the pound.

If in May 1997, three weeks after his stunning General Election victory, Tony Blair had returned from the Amsterdam heads of government summit and announced a referendum, I'm convinced he would have won and Britain would now be a member of the euro zone.

He didn't because he was afraid he'd lose.

He didn't, and it's cost him the initiative, and possibly Britain's membership of the single currency for ever. The Government has let the anti-euro lobby make all the running – there has been no attempt to tell the British people what benefits there are to joining.

I suspect Tony Blair, deep down, rues his indecision.

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