Major backs Clarke in Euro row

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Kenneth Clarke, the Chancellor, today will face a showdown with the Euro- sceptics in the Cabinet over the European single currency, with the backing of John Major, Michael Heseltine and Malcolm Rifkind.

With their support, the Cabinet is expected to reaffirm its "wait and see" approach, and rule out any change of policy before the general election.

By holding the debate today, Mr Major will be seeking to settle the issue and avoid it overshadowing the political Cabinet at Chequers on Monday, when the outline of the election manifesto will be agreed.

Michael Howard, the Home Secretary, led the Cabinet Euro-sceptics in pressing the Chancellor to accept a more Euro-sceptic approach to the single currency. Others backing Mr Howard at a previous Cabinet meeting included Peter Lilley, Michael Portillo and Gillian Shephard.

William Waldegrave, the Chief Secretary to the Treasury, also took the view that Britain could not enter the first wave of a single currency. That influenced Stephen Dorrell, the Secretary of State for Health, who recently backed demands for Britain to renegotiate its position in the European Union.

They were hoping to push the Chancellor into changing the policy by announcing that it was unlikely that Britain would enter the single currency in the first wave.

Mr Clarke's allies privately say he believes it is unlikely that Britain will enter the first wave. But he has rejected any shift of policy and left an implicit threat that he would resign if a change of policy was agreed.

The Cabinet Euro-sceptics had insisted that the other member countries were fudging the criteria for entering the single currency. They pointed to the French, who are using public-sector pension funds to meet the Maastricht debt criteria for joining the currency.

The Chancellor will present the Cabinet with a Treasury paper telling colleagues that no judgement can be reached on whether or not the other countries are "fudging" the criteria until after the election. That would leave the Government with no alternative but to support the existing policy.

"We are sympathetic but the French example is a one-off. It is not enough evidence on which to decide that the criteria are being fudged," said one ministerial source.

The Euro-sceptics, having made a stand in the Cabinet, are expected to accept the lead taken by the Prime Minister to back Mr Clarke.

Madrid - After a meeting with his Spanish counterpart, the Foreign Secretary, Malcolm Rifkind, welcomed Mr Matutes' declaration that Spain would not question Gibraltarians' right to move freely between Gibraltar, Spain and the rest of the EU, writes Liz Nash.

Mr Rifkind said he hoped this would "remove the anxiety of the last few weeks".

He added that the problems related to passports of Gibraltarians who were British subjects because of their residence in a dependent territory, but without right of abode in the United Kingdom.