Blair to launch defence of euro

TONY BLAIR will come off the fence next week and make a pro-European speech in an attempt to turn the tide of Euroscepticism in Britain.

The Prime Minister's fightback following Labour's defeat at last month's Euro elections will be seen as the start of a long campaign to win over the British public to membership of the single currency.

Aides insisted last night that the keynote speech would not change the Government's policy on the euro. They said it would explain why Mr Blair's policy of "constructive engagement in Europe" was right for Britain. Mr Blair's speech will be seen as an attempt to kill speculation that the Government is backing away from its plans to call a single currency referendum soon after the next general election.

There are growing signs of differences between Mr Blair and Gordon Brown, the Chancellor, over whether Labour should retreat from this pledge in an attempt to neutralise the euro issue at the election.

Mr Blair's allies suspect that aides of Mr Brown are fuelling press reports that a referendum could be delayed. The Blairites are also worried that the Chancellor has told Bill Morris, general secretary of the TGWU transport union, that he is sympathetic to his warnings about the jobs threat posed by the single currency. "He has been winding Bill Morris up against the euro," said a ministerial source.

One pro-euro minister said: "Gordon is in a funk about the fall in the value of the euro. Everyone wants to park [delay] the whole thing until after the general election." But another minister insisted: "Gordon has acute political antennae. He knows that people are worried about the euro."

Labour's focus groups suggest opposition is hardening against British membership. "The real problem is that we keep saying Europe is corrupt, the commissioners are on the fiddle, the MEPs are on the gravy train. The public have the impression that everything that comes out of Brussels is bad," said a government insider.

Last night Downing Street stuck to the Chancellor's policy statement in 1997 that Britain was preparing for entry "early in the next parliament". The Prime Minister's spokesman added: "There has been no change."

But Francis Maude, the Shadow Chancellor, claimed Mr Blair and Mr Brown were now at odds over the euro. "Endless spinning and counter- spinning, Blair against Brown and vice-versa, can do nothing for the credibility of this government abroad and is providing an unstable background for business when planning for the future," he said.

Anxiety among pro-Europeans over the single currency's performance since its January launch eased yesterday when the euro surged on the foreign exchange markets for the second day running to climb above $1.04.