Blair's instinct favours euro vote, says Mandelson

Tony Blair still wants to hold a referendum on the euro before the next election, Peter Mandelson said yesterday.

The former Northern Ireland secretary said that securing the economic gains of entry into the European single currency was one of the central goals of Mr Blair's premiership and warned the Chancellor, Gordon Brown, not to over-emphasise the risks of entry when he publishes his assessment of the five economic tests for joining the currency.

Mr Mandelson said: "I think it would be a shame and I suspect this would be his [Mr Blair's] view too, if the assessment carried out were to emphasise the risks of going in without adequately giving weight and equal weight to the risks of staying out."

Mr Brown is expected to say that the time is not yet right for Britain to enter the eurozone, when he publishes the Treasury's assessment of thetests by the first week of June. But the Chancellor is still involved in a tense argument with Mr Blair over the precise terms of the statement, likely to be delivered to MPs shortly after the Easter recess.

Mr Brown wants to rule out entry for the rest of the Parliament, but Mr Blair would like to keep the door open to a referendum before the next election, which must be held by 2006.

Mr Mandelson told the BBC's The World This Weekend: "I think his instinct will be to do that. I think he considers that Britain will lose significant growth potential and miss out economically primarily and also politically if we remain outside the euro indefinitely.

"Therefore I think it will be his instinct to go for a referendum in this parliament. But that of course depends in the first instance on the economic assessment being carried out by the Government."

Mr Mandelson insisted that the requirement for convergence between the British and eurozone economies had been "broadly achieved".

"I think that most economic analysts and commentators ... believe we will be ready to go into the single currency in about two years' time, if we take the decision to do so in a referendum some time over or around about the next 12 months."

Asked whether Mr Blair planned to "go on and on" in Downing Street, the Hartlepool MP said: "I don't think he's going to want to overstay his welcome. That I am sure about. But I think he will judge the time to go as Prime Minister not by how long he has been there, but by how much he has achieved, and what he has further to do.

"He has more to do in transforming the productive capacity and productivity and sustainability of our economy ... to overhaul the welfare system and public services in this country. He has more to do to modernise and decentralise Britain's very centralised system of government and to revitalise our local democracy.

"And of course he has more to do to make Britain genuinely one of the leading players in Europe," he added.