Labour faces split over Europe
Sources close to the Labour leader, John Smith, warned bluntly last week that Mr Gould will have to consider his position after Wednesday's Shadow Cabinet discussions on European policy following the French referendum on Maastricht.
The Labour leadership has been angered by Mr Gould's claims, in interviews on Friday, that several members of the Shadow Cabinet were critical of party policy. However other senior Labour politicians sympathetic to devaluation, including David Blunkett, the health spokesman, John Prescott, transport spokesman, and Michael Meacher, overseas development spokesman, are expected to support Mr Gould this week.
Mr Gould's allies are optimistic that a compromise can be reached, although he was said to have been put in the difficult position of being 'a dissident proved right'. This may put him on collision course with Mr Smith who is expected to show his pro-European credentials this week, even if the French vote 'No'. If they do, Mr Smith would accept that Maastricht treaty was dead but would probably demand a new treaty with tougher economic convergence targets and without British opt-outs. Mr Gould has already put on record his opposition to the Maastricht treaty.
Mr Smith is also in favour of early re-entry into a reformed exchange rate mechanism - although this is not likely to be a point of major division with Mr Gould who believes in a managed exchange rate policy.
In a show of strength both the Shadow Chancellor, Gordon Brown, and the Shadow Home Secretary, Tony Blair, made statements yesterday in defence of the pro-Europeanism established under Neil Kinnock.
Mr Brown accused the Tories of 'lurching into a new anti- Europeanism even when the Prime Minister is President of the Community'. Mr Blair warned of a 'retreat back into Thatcherism for want of any alternative'.
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