Pro-Europe group aims to halt EMU

TONY BLAIR'S plans to win public support for British membership of the single currency were undermined yesterday by the launch of a new group of pro-Europeans who oppose the euro.

The New Europe research and campaign group, headed by Lord Owen, the former SDP leader, argues that Britain can still enjoy influence in the European Union without ditching the pound. Allies of Mr Blair say he is convinced that Britain will not have "real clout" unless it takes part in monetary union.

In a speech in Milan today, Mr Blair will say that the euro alone will not bring prosperity, but that it could do so if combined with economic reform. At a meeting of EU socialist parties, the Prime Minister will reject German demands for higher taxes and more regulation. He will urge Europe to emulate the United States, saying it has created "real jobs" in hi-tech industries and not just so-called "McJobs" in hamburger bars.

Under the slogan "common sense on the single currency", Lord Owen's organisation will seek to influence public opinion so that Mr Blair is deterred from calling a referendum on the euro.

"We are quite unashamedly and unavowedly supporters of the European Union," Lord Owen said. "You can be a committed member of the EU without being a member of euroland."

He admitted that it was in Britain's economic interest for the euro to succeed, but said the Government should not be pressured into joining or do so because it was "fashionable". His group would research some of the important unaddressed issues - such as the impact of the euro on mortgages, pensions and the harmonisation of state benefits.

The former Labour foreign secretary said his body had "deliberately shunned" support from Eurosceptics, but it would work closely with the Business for Sterling group, which also opposes the euro. He would share a platform with sceptics if Labour called a referendum.

The group's launch document said: "We do not say 'never' but for now we are in the enviable position of being able to wait and watch others take part in an experiment which may or may not be a success. We accept that the EU is evolving over time so that what might be inconceivable today could become commonplace tomorrow."

The campaign group's other leading lights include Lord Healey, the former Labour chancellor, Lord Prior, the former Conservative cabinet minister and ex-GEC chairman, and Martin Taylor, the former Barclays Bank chief executive. It also includes academics and journalists, with a heavy presence from The Times, whose parent company is chaired by Rupert Murdoch.

Lord Prior, a staunch pro-European, said he had "torn myself away from my former friends" because the euro was a supremely important issue. He did "not want to be associated" with Tories who were "anti-EU".

He criticised the Government's policy of preparing for entry without having decided to join as "almost the worst of all worlds". He added: "It ought to try to get on with it or forget about it."

Pro-Europeans hit back at the new group last night. Giles Radice, chair of the European Movement, said its members were "deluding themselves. They are presenting a false choice to the people of Britain."

Colin Sharman, chair of accountancy firm KPMG International, said British business could not hope to influence European affairs outside the euro. "Being in the EU but not being in the euro is roughly the equivalent of being half-pregnant," Mr Sharman said.

Hamish McRae, Review, page 4