John Major, facing Mr Blair for the first time at Prime Minister's Questions, insisted that the issue of a referendum 'very probably will not arise', though he stopped just short of ruling one out.
The exchanges underlined the growing political momentum behind an underlying debate on a referendum on Europe after the intergovernmental conference (IGC) on the European Union's future, currently scheduled for 1996.
Mr Blair's decision to press Mr Major on the referendum issue was seen in Westminster as a strong hint that Mr Blair could yet come out in favour of a referendum on the outcome of the IGC or on a single currency or possibly on a combination of the two.
Paddy Ashdown, the Liberal Democrat leader, has already committed his party to a referendum on the IGC's conclusions.
Mr Blair pressed the Prime Minister to say whether a statement by the Chancellor, Kenneth Clarke, which Mr Blair said had 'specifically ruled out a referendum on a single currency', had been made on behalf of the Government.
To opposition jeers, Mr Major replied that 'at this moment no one knows what may be at issue in the intergovernmental conference in 1996. The question of a referendum on any issue does not arise and very probably will not arise.'
Mr Blair replied that the Chancellor, by ruling it out, had evidently thought it had arisen and that he took one view, Michael Portillo, the Secretary of State for Employment, another, and Mr Major hovered between the two. He added: 'A divided government is a weak government and a weak government is no good for Britain.'
Mr Major retorted that a Labour government would be a weak one because he had declared that his government would not be isolated in Europe 'irrespective of the issue, irrespective of the British interest, irrespective of the views of this House . . . '
If Mr Blair does decide to advocate a referendum nearer the election it will significantly increase pressure from within the Tory ranks to promise one, at least on the single currency.
The long-term danger for the Government is that if it resists, a Labour proposal for one could secure backing from those Eurosceptic Tories who have long been demanding one, threatening a government defeat. Mr Clarke had said in a BBC interview last Thursday: 'I think a referendum is a very strange way to run a modern industrial democracy. If people in the chattering classes think that my constituents are longing to have a referendum on the details of economic and monetary union, I think they are slightly up the creek.'
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