Whole Cabinet will decide on euro, says Blair

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Tony Blair said the whole Cabinet, and not Gordon Brown on his own, would decide whether the Government reassessed its five economic tests for joining the euro.

The Prime Minister said the process for deciding whether to re-run the tests would be the same as in the run-up to last month's policy statement, which involved the full Cabinet. By mobilising the Cabinet's majority of euro supporters, Mr Blair won concessions from the Chancellor, including a "route map" of the measures needed to allow Britain to join.

Mr Blair was questioned by the Liaison Committee of senior MPs yesterday about who would decide whether to reassess the five tests next year. He replied: "That will obviously be decided by the Government as a whole, but in the same way as the process that led up to the 9 June statement. What we have done is leave it open to ourselves to come back to this in the Budget next year."

Allies of Mr Brown have suggested he held the upper hand on whether to order a fresh assessment next spring by ensuring the Treasury's five tests remain paramount and that the crucial decision is announced in the Budget. In his Mansion House speech last month, the Chancellor reasserted his control over euro policy, declaring that there could be "no short cuts and no fudge" on his tests.

Mr Blair's comments will fuel speculation that he intends to push for a referendum next autumn if the British economy has converged with the eurozone's by March. He told the MPs he hoped to see progress by the time of the Budget.

The Prime Minister said: "I happen to believe in principle that British membership of the single currency is right. I think it would be good for stability, good for investment. I think for a Europe of 25 [countries] for Britain on political grounds to stay out of the single currency is a mistake. As to the timeline as to when we join, that has got to be decided according to the economics." Membership would not be ruled out on political grounds.

Michael Howard, the shadow Chancellor, said: "Tony Blair is putting his political ambition ahead of Britain's economic reality. He is gambling with the jobs and mortgages of millions in his attempt to join the euro."

Mr Blair said he did not believe there was a case for a referendum on the proposed EU constitution. "If at the very moment when we had this fantastic opportunity we were then going to paralyse the EU by effectively saying we will not have anything to do with this convention ... it would be disastrous for Britain and British influence."