Straw: We can't join euro while the pound is strong

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Indy Politics

Cabinet divisions over the euro were reopened yesterday when Jack Straw, the Home Secretary, warned that Britain could not join European Monetary Union while there was a "big disparity" between the pound and the single currency.

Cabinet divisions over the euro were reopened yesterday when Jack Straw, the Home Secretary, warned that Britain could not join European Monetary Union while there was a "big disparity" between the pound and the single currency.

In contrast to recent statements by Robin Cook, the Foreign Secretary, Mr Straw also pointed out that the Danish referendum No vote would provide "background music" to the debate in the UK.

Mr Cook, Peter Mandelson, the Northern Ireland Secretary, and Stephen Byers, the Trade and Industry Secretary, are all firmly in favour of the euro, but Mr Straw warned that membership was "not a piece of magic" for the economy.

His remarks are proof of increasing scepticism within the Government and follow indications that Tony Blair is coming under pressure to delay the referendum on the euro planned for early next Parliament.

The Home Secretary, who is one of the most "euro-cautious" in the Cabinet, made clear that he felt the huge difference in value between sterling and the euro made British membership impossible. He issued a strong rebuke to those pro-euro supporters who claim that Mr Blair could force economic convergence and influence the markets if he pushed for early membership. "At the moment, the economic conditions are not met. Apart from anything, there's a big disparity between the level of the pound and the level of the euro," he told GMTV's Sunday Programme.

"A lot of the argument about entering the euro has been to help the competitive position of British industry, vis-à-vis exporting to Europe. And there's obviously not a piece of magic that by seeking application to the euro you can automatically improve that competitive position."

Mr Straw's remarks echo those of Martin O'Neill, the Labour MP and chairman of the Commons Trade and Industry Select Committee, who said last week that the case for delaying a referendum was clear.

In his interview, Mr Straw also took a starkly different line from Mr Cook on the impact on Britain of the Danish rejection of the euro. "Obviously what happened in Denmark will become as it were the background music of the euro debate here," he said. When asked if that music was "pretty sombre," he said "Yes".

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