Hague's pledge to save pound puts Blair on the defensive

TONY BLAIR will seek to play down the single currency as an issue in next month's European elections in an attempt to blunt Tory attacks that he is trying to take Britain into the single currency "by stealth".

Launching Labour's manifesto today, Mr Blair will demand radical reforms of the European Union. He will argue that the single currency is not among the powers of the Strasbourg Parliament.

Yesterday William Hague put his opposition to the euro at the forefront of the Tory campaign. In contrast, Labour will highlight other issues such as business, crime, drugs, building strong communities and improving the environment. But Downing Street last night dismissed speculation that Mr Blair would water down his plans to take Britain into the single currency.

Today's Labour manifesto commits the party to joining the euro, providing Britain meets five economic tests. "The Government's desire to join the single currency is real. The five economic conditions are real," said his spokesman.

The failure of the Government to take a more robust lead will disappoint euro-enthusiasts. But ministers are keen to make the election a referendum on its mid-term popularity, rather than a vote on the single currency. "William Hague is playing it up to pander to his sceptics and save his own skin," one said.

Mr Blair will set outline "a bold agenda for reform in Europe" including US-style flexible labour markets rather than job-destroying regulation. Reforms should allow EU nations to "act more decisively together," he will say. They should "integrate where necessary but decentralise where possible".

He will claim that Labour's positive approach to Europe is getting results for Britain, saying the divided Tories would have no influence as they carped from the sidelines.

Yesterday Mr Hague played the Eurosceptic card by pledging to "save the pound". In his foreword to the Tories' election manifesto, he accused Mr Blair of trying to "bounce" Britain into the single currency.

Mr Hague's decision to fight the elections on such a platform is likely to dismay pro-EU Tories, such as Kenneth Clarke, but he insisted the campaign was in touch with the views of ordinary Britons who did not wish to see the pound scrapped: "We represent the mainstream majority opinion."

t Gordon Brown emphasised that the Government and Bank of England were not trying to target a lower exchange rate ahead of joining the single currency, but commiserated with businesses over the strong pound in a speech to the Confederation of British Industry's annual dinner last night.