Brown moves to scupper euro poll in this parliament

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Indy Politics

Gordon Brown closed the door to early membership of the single currency last night as he warned that the British people would only vote to join after a long campaign to convince them the euro was in the country's long-term economic interest.

The Chancellor rebuffed pressure from pro-euro Cabinet ministers who want a referendum before the next general election, favoured by Tony Blair, and while Mr Brown's announcement on euro policy on 9 June will not rule out a referendum in this parliament, his speech suggested he believed euro membership could not be achieved for some years. He mapped out a long shopping list of European Union reforms before Britain should join.

Simmering tension boiled over when the former cabinet minister Peter Mandelson warned that not calling a referendum before the election would "do damage to the Government and the New Labour project, and inevitably therefore to the Prime Minister as well." Mr Mandelson told Westminster journalists: "The price we would pay in lost investment and trade and jobs in Britain would be incalculable."

A Blair ally said the Prime Minister had been out-manoeuvred by the Chancellor because he was not "as obsessed with politics" as Mr Brown, who was "a politician right down to his fingertips, 24 hours a day, seven days a week".

Speaking to the annual dinner of the Confederation of British Industry in London, Mr Brown insisted the Government would "reject short term or quick fix options and we will make the right long-term decisions on Europe". In a key passage, the Chancellor said: "It is only by showing that at all times we advance the national economic interest that I believe we can build the pro-European consensus that has eluded Britain for so long - a consensus that is essential for Britain if we are to play the effective role we want in Europe and the global economy."

Aides said Mr Brown's speech was "pro-European" and he was not putting a timescale on British entry. They contrasted the Chancellor's desire to build lasting public support for the euro with demands for an early referendum by the Britain in Europe group, which has close links with Downing Street.

A senior Treasury source told The Independent: "Businessmen writing letters to newspapers and calling for a referendum tomorrow doesn't convince anyone. The crucial thing is to build solid and sustained support for it on economic grounds."

Mr Brown told the CBI that Britain can play a pivotal role in helping Europe adapt to the global economy. But he said the EU must "step up the pace of economic reform" and become more flexible. It could no longer be "a trade bloc sheltered from the rest of the world" but must look outwards. "This allows Britain to enter a new and more positive stage of its relationship with the rest of Europe," he said. "A Europe reformed is a Europe that can be the engine of liberalisation in the world," he continued adding that that would require change to agricultural policy, which he called "Europe's most protected and distorted sector", and commitment to free trade.

The Chancellor added: "Ruling out [euro] membership on grounds of dogma not economics would in my view be damaging for investment, jobs and business. But we similarly reject those who would urge us to join irrespective of the rigorous assessment of the five tests that define the long-term national economic interest."

Mr Brown said his 9 June assessment would spell out the "clear benefits the euro could bring to Britain in trade, investment, growth and for British business, consumers and jobs.

But he vowed not to repeat the Tories' mistake of joining the exchange rate mechanism and risk stability. "So if, based on the five-tests assessment, the economics are right we should join. If the economics are not right, we should not."