Labour edges even closer to the euro

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LABOUR PARTY leaders adopted their most positive policy statement on Europe yesterday, including a more assertive stance on the single currency than the Government's official line.

Labour's national executive committee (NEC) agreed to fight the elections to the European Parliament in June on a joint manifesto agreed with 19 other European socialist parties.

Robin Cook, the Foreign Secretary, who has co-written the pan-European socialist programme, admitted at the NEC meeting that it went beyond the Government's existing policy on the single currency. His comments will fuel speculation that the Government is about to adopt a more positive approach, to bring it into line with the party's stance.

However, allies of Tony Blair said yesterday he did not want government policy to change, partly because this could cause problems in the financial markets. Instead, Gordon Brown, the Chancellor, is likely to send a positive signal to Britain's EU partners next month when he publishes a "national changeover plan" for joining the euro. "The language will change, the policy will not," said a government source.

Mr Blair has repeatedly said the Government will call a referendum on the issue only after five key economic tests have been met. But on Saturday in Vienna he will sign the European-wide socialist manifesto, which lists the economic benefits of the euro and enters none of the caveats the Government normally lists.

The document says: "The euro should make a significant contribution to promoting sustainable growth, low inflation and high levels of employment. It is in the interest of all member states, whether members of the single currency or not, that the euro is a success. A sound euro will protect Europe against the destabilising pressures of currency speculation, allow for lower interest rates and contribute to a reformed and more stable financial world system. It will also increase the purchasing power of the consumer through greater price stability, reduced costs for business and improve competition.

"The European Central Bank, independent but also accountable, must work in close dialogue with the democratic institutions and economic policy- making bodies of the union.

"We commit ourselves to ensuring that the single currency achieves a smooth introduction and provides growth, employment and stability."

Mr Cook, who in the past has been seen as sceptical about a single currency, is now convinced after its successful launch that the Government should strike a more positive tone. "He believes this will help to ensure we enjoy influence in the EU even though we have not joined the euro at the outset," said a source.

Drafted by Mr Cook and Henri Nallet, Europe spokesman for the French socialists, the manifesto declares that the left-wing parties "say yes to a market economy but no to a market society".

It calls for greater use of majority voting in EU decision-making and "closer economic co-ordination aimed at ensuring sustainable growth and high levels of employment".

On the issue of tax, it calls for "better co-ordination to prevent harmful tax competition in the form of unfair tax breaks".

The Government's pro- European tilt was underlined in a speech yesterday by Roger Liddle, the Downing Street policy unit's adviser on Europe, who said Labour is now "naturally pro-European" and has decided that Europe is "where our historical legacy lies".

Mr Liddle told a Brussels think-tank that Labour now suffered from "none of that visceral hostility to Europe", and added: "A pro-European position is accepted as a normal part of life".

Approval of the draft manifesto marks a significant change for Labour. Alan Donnelly, leader of the European Parliamentary Labour Party, said: "The last two manifestos were documents which we simply could not associate ourselves with because they contained elements which our party felt it had to stand apart from. This document reflects our core values."