Tony Blair declared yesterday that he would like to call a referendum on the single currency before the next general election.
In his most positive statement about the euro, the Prime Minister told the Labour conference in Brighton: "We should only be part of the single currency if the economic conditions are met. They are not window-dressing for a political decision. They are fundamental. But if they are met, we should join, and if met in this parliament, we should have the courage of our argument, to ask the British people for their consent in this parliament."
Although Downing Street insisted Mr Blair had not changed the policy set out in Labour's general election manifesto, it is the first time he has personally raised the prospect of a referendum before the next election.
Pro-European cabinet ministers warmly welcomed his speech. One said: "The wording is different and significant. This is an important change of gear."
While the Chancellor, Gordon Brown, is more cautious about a referendum in this parliament, Mr Blair is increasingly confident that public hostility to the euro could be turned round in a six-month campaign. The most likely dates for a referendum are the autumn of next year or the spring of 2003.
Mr Blair's allies stressed that a final decision on whether to call a referendum would be taken on economic grounds. "The key issue is convergence between the British economy and Europe. If it's there, we will go for it. But the jury is still out."
Blair aides denied that he was trying to wrong-foot Eurosceptic newspapers by revealing his intentions at a time when they were less likely to attack him because of the battle against terrorism. The aides said he decided to talk up the prospects of a referendum in August when he began planning yesterday's speech. However, other ministers have argued that Europe's strong pledge of support for America and the need for closer co-operation against terrorism have strengthened the political case for joining the euro.
Mr Blair devoted about half of his conference speech to domestic issues and gave a clear hint that he was ready to consider raising the tax burden if it was necessary to safeguard public services. If the choice was between investment and tax cuts, he said, investment should come first.Reuse content