Blair 'must grasp nettle on euro or he will fail'

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Indy Politics

The leader of the campaign to take Britain into the single currency warns Tony Blair today that his term of office will be regarded as a failure unless he grasps the nettle and advocates joining the euro.

Writing in The Independent, Simon Buckby, campaign director of Britain In Europe, says the Prime Minister will either "whittle away his term in office in the footling manner of Harold Wilson" or "make history by resolving the long-running sore of Britain's relations with Europe."

The warning by Mr Buckby, normally regarded as a Blair loyalist, is the latest salvo in a heated battle over the euro that has broken out since the election victory last week. Britain in Europe, the embryonic "yes" campaign in a referendum, wants to capitalise on Labour winning a crushing victory on a pro-European platform. The "no" camp has launched a new crusade against euro membership, while frantically distancing itself from William Hague's ill-fated campaign to "keep the pound".

Skirmishing over the euro is going on at the highest levels. There are growing signs of a potentially explosive rift between Mr Blair and Gordon Brown, who is more cautious about early euro entry. As Blairites talked up the prospect of the Prime Minister launching a national debate on Britain's future in Europe this autumn, allies of the Chancellor tried to pour cold water on the idea. They fear a campaign led by Mr Blair to spell out the benefits of euro membership might pre-judge the assessment of the Government's five economic tests for joining, a review Mr Brown is guarding jealously.

The Blairites and Brownites appear to be telling different tales to the newspapers. Yesterday the Financial Times suggested Mr Blair's Cabinet reshuffle had paved the way for a referendum in autumn 2002 or spring 2003, and that Mr Blair was expected to raise the tempo this autumn in a series of speeches. After a similar story appeared in The Independent last week, the pound fell to its lowest level against the dollar for 15 years amid City speculation that Mr Blair would call an early referendum. Sterling remained under pressure yesterday.

Mr Brown is evidently not amused, and his aides appear to have told The Sunday Times, The Times and The Guardian that there would be no early referendum. The Brown camp argues that the priority is improving public services, so there may not be a euro referendum before the next election.

Mr Blair, in turn, was not amused by the briefing from the Brownites. "Gordon is tilting at windmills; no one is talking about an early referendum," said one Blairite. Another said: "Gordon is worried about being bounced by a campaign on the merits of the euro. He wants to stop it in its tracks."

Similar tensions were evident between the Prime Minister and his Chancellor during the election. Mr Brown was furious when Mr Blair told the FT that he believed a referendum on the euro could be won. According to the Brownites, this breached Labour's strategy of talking about "Europe, not the euro" during the election.

Mr Blair can also cut his cloth to suit his audience. Interviewed by The Independent during the election, he said: "It goes without saying that if you are not in the single currency, you have less influence over the single currency." However, he toldThe Times: "We absolutely have not and do not need to be a member to make our position strongly felt."

Mr Blair's Cabinet reshuffle has provoked another flurry of speculation over his intentions on the euro. It is true that Jack Straw, the new Foreign Secretary, is the Cabinet's most Eurosceptic member. But he is also the ultimate pragmatist, and will campaign for the euro if that is what Mr Blair wants. Overall, the new Cabinet marks a deliberate shift away from the Brownites and tilts the balance towards the Blairites.

How, then, should we read the contradictory signals coming from the Government? Close allies of Mr Blair say he does want to raise the temperature of the euro debate, and predict he will do so even if it means overruling Mr Brown.

However, this does not mean that Mr Blair will definitely call a referendum. His heart is telling him to go for the euro, but his head is not yet convinced. He will keenly study the opinion polls and focus groups before making up his mind, probably next year. It will have to be a joint decision with Mr Brown, and one that sticks.

The stakes in their discussions could not be higher: as the newspaper reports of the past few days show, a public split between Prime Minister and Chancellor could shipwreck the whole Government.

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