'Dithering' Blair puts off euro decision

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Tony Blair will shy away from a public campaign on the single currency until ordinary people have had time to get used to euro notes and coins.

Cabinet ministers, after a week of fevered speculation about the strategy and timing of a referendum, now acknowledge the "key moment" will be the point when the single currency is introduced on the Continent in January 2002.

They anticipate teething troubles with the currency, but the Government is pinning its hopes on it quickly becoming popular. "Then the nature of the debate could change," a Cabinet minister said.

A senior Whitehall source said: "There will be a lot of it in circulation pretty quickly – in Oxford Street, Stratford-on-Avon, places like that. Any tourist destination, any shop or restaurant, will start to think they should be taking euros as well as pounds."

Until then, British membership remains undecided, prompting accusations that the caucus of people around the Chancellor and the Prime Minister, responsible for the decision on the single currency, is "dithering".

One Labour insider said: "There is an inertia in the pro-euro campaign due to the fact that Blair has not made up his mind. I had thought in the past there was some grand strategy, but it is clear that that is not the way he works. He is an inveterate ditherer."

It is understood that Mr Blair wants to be the Prime Minister who takes Britain into the single currency. But, mainly through the signals given out by Ed Balls, the Chancellor's chief economic adviser, Gordon Brown is considered more sceptical about euro membership.

He has stuck to the policy outlined in October 1997 that Britain would go into the euro only after his five economic tests had been met, and both Parliament and the people had agreed to entry.

The Treasury dismissed as "complete fabrication" reports last week that a timetable for euro membership had been agreed between the Chancellor and the Prime Minister. And it was denied there was a plan favouring a poll in autumn 2002, with spring 2003 as a second choice.

But the Chancellor's key aides insist nothing has changed. The commitment is there in principle and an assessment of the tests will be made within two years.

In Whitehall, senior sources revealed that there were "key differences" over the preferred outcome of those tests, with the Prime Minister's desire for a green light not yet matched by the Chancellor.

The strength of the economy, which Downing Street believes is a campaign's vital foundation, has been used by some ministers as a reason to go into the euro and by others as a reason to hang on to the pound. Public opinion is still hostile.

Before sticking their necks out on a referendum campaign, Mr Blair and his senior lieutenants intend to campaign for Britain's place in Europe. Last week Foreign Secretary Jack Straw made his first speech on the EU, warning against a Europe of elites and promoting "our kind of Europe". Mr Blair plans major speeches on the issue after the summer break. This is seen as a "tentative" approach, to "get Britain to love Europe before it can love the euro".

Britain in Europe, the pro-European, pro-single currency campaign, will begin campaigning this autumn. This week the group will publish a pamphlet reprinting a 40-year-old document by Harold Macmillan, making the case for British involvement in the European Community.