Tony Blair will meet Helmut Kohl at Chequers on Monday for private talks in which the German Chancellor is expected to seek to clarify Britain's policy on entry to the single currency, following contradictory signals from the Treasury and Number Ten.
The waters were further muddied last night by Gordon Brown, the Chancellor, in an interview in which he tried to dampen down Treasury-inspired expectations that Britain would announce its intention to enter the single currency early after the first wave in 1999.
Mr Brown used the interview in the Times to try to show that there was no rift between himself and the Prime Minister, as reported last week in The Independent. But he carefully avoided giving any comment which would rule out early entry after the first wave.
"If we do not join in 1999, our task will then be to deliver a period of sustainable growth, tackle long-term weaknesses in the UK economy and to continue to press for reform in Europe," he said.
The speculation that Britain would join the single currency soon after the first wave was started in the Financial Times, in spite of the Government's insistence that the policy had not changed.
The Treasury was furious over The Independent's report that the Chancellor was seeking to put pressure on Mr Blair to agree to early entry, but the Prime Minister was resisting. The latest interview will be seen as an attempt to repair the damage of the recent Treasury briefing, but it will do nothing to clarify the Government's long term plans over the single currency.
Mr Brown is expected to announce in a few weeks that Britain will not join the first wave, while leaving open the option of joining at a later date. Chancellor Kohl can be forgiven for being confused by the signals, but they may be seen as a confirmation that Mr Blair has the upper hand over his Chancellor on the issue.
Downing Street and the Treasury last night repeated that the Government's policy on the single currency had not changed. A Treasury spokesman said: "The Chancellor will make an announcement to Parliament before the end of this year."
The Prime Minister is expected to seek Chancellor Kohl's support for Britain's plans to use the six-month presidency of the EU, starting in January, to complete the single market and seek greater flexibility in labour markets.Reuse content