Pro-European Tories ready to defend Emu

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Pro-Euro Tory MPs are ready to repudiate the Prime Minister, if he rules out Britain's entry into the single European currency in the heat of the election campaign.

John Major is under pressure from Euro-sceptics in the Cabinet to harden the Government's "wait and see" policy on the single currency to steal a march on Labour during the election.

But a 50-strong group of Tory MPs is ready to disown any move by the Prime Minister to ditch that policy in an attempt to outflank Tony Blair. "We would also ask Kenneth Clarke [the Chancellor] to repudiate it," said one of the leaders of the group. Such a move would destroy any hope of the Tories holding to a united line on the single currency.

The MPs have privately spoken to the Chancellor about the policy. "He is adamant that there will be no change in the policy," said one MP.

A letter signed by more than 50 Tory MPs was handed into the Government shortly before Mr Major called the election, to reinforce their demands for the Government to stick to its agreed policy on Europe during the election.

Some pro-Euro Tory MPs refused to sign the declaration on the grounds that it was not strong enough. They fear that the Prime Minister may be persuaded to rule out a single currency by the number of Tory Euro-sceptics who are prepared to rule it out in their election addresses. Peter Temple- Morris, leader of the Macleod group of "one nation" Tory MPs will make a commitment in his election address to enter a single currency.

Malcolm Rifkind, the Foreign Secretary, described the single currency as "extraordinarily dangerous'' in The Hague this week, raising expectations of a tougher Cabinet policy. Mr Rifkind warned that the issue could divide the European Union for a generation.

Senior ministers believe it could transform the Tories' electoral hopes, and close the gap with Labour before polling day, if Mr Major campaigned on the theme of "saving the pound", with the threat that Labour would negotiate it away.

However, senior Labour sources said Mr Blair would follow Mr Major in hardening the policy on the single currency. The Labour leader says in the New Statesman there are "a lot of formidable obstacles" to monetary union.

Bundesbank leaders have intensified the pressure on the Government from the Euro-sceptics to rule out the single currency by making it clear the convergence criteria will be "fudged", by refusing to accept the treaty obligations to reduce public debt in Germany to below 3 per cent of its Gross Domestic Product.

The Chancellor and the Foreign Secretary reached an uneasy compromise that Britain was "hostile to a fudge" after Stephen Dorrell, the Secretary of State for Health, insisted that the Government was against the single currency.