Clarke set to raise extra hurdles to single currency

Kenneth Clarke, the Chancellor, was last night completing plans to unveil a series of new British preconditions for participation in a single European currency after unusually fierce clashes on the issue between Tony Blair and John Major on the f loor ofthe Commons yesterday.

The Labour leader provoked the Prime Minister into calling him a "dimwit" by charging him with showing "weak leadership" by refusing to say where he stood on the principle of a single currency.

But Mr Major's repetition in the Commons - after a series of mixed signals from the heart of government on the previous day - that he would require "other" criteria to be met than those already set out in the Maastricht treaty clears the way for an important new statement of policy from the Chancellor tomorrow night.

In his speech to the European Movement, Mr Clarke is expected to spell out British concern that wide variations between labour-market policies and the potential levels of structural unemployment between member states could place intolerable strains on monetary union even if the existing Maastricht criteria were met. Those criteria require convergence between the participating countries on inflation levels, interest rates and public-sector deficits.

In what ministers are making no secret constitute extra hurdles before Britain would even contemplate membership of a single currency, Mr Major said the new criteria would have to be met before the Government could decide whether it would be right "economically or constitutionally" to proceed.

Amid uproar, Mr Blair warned: ``Until you decide where you stand on this issue as the Prime Minister of the day, your leadership will remain weak, your Cabinet divided and Britain effectively disabled in Europe."

Labour, most recently in a speech by Robin Cook, foreign affairs spokesman, has made it clear that they, too, would require a wider range of criteria than those laid down in the Maastricht treaty - broadly similar to some of those Mr Clarke is likely to spell out tomorrow. But they were at pains to point out last night that, in contrast to Mr Major, Mr Blair has made it clear the party adheres to the "principle" of a single currency.

Mr Major said in reply to Mr Blair's taunt yesterday: "I have set out for you the conditions that would be right for us to consider . . . I am not going to take a judgement that is crucial to the constitional future of this country until I see the economic circumstances of the day. Frankly, only a dimwit would ask me to." Later, in a heavily pro-British speech to the Conservative Political Centre, the Euro-sceptic John Redwood, Secretary of State for Wales, insisted that "by far and away the most important mutual economic relationship we have is with the USA."

In Europe, he said, "we should argue for our vision of a free and prosperous association of free and prosperous peoples . . .

``We joined the club to benefit from it. We must not shy away from praising it when it's good and remodelling it when it's bad."