Tony Blair will meet the German Chancellor, Helmut Kohl, at Chequers on Monday for private talks which are expected to centre on Britain's entry into the single European currency.
The Prime Minister's office yesterday underlined the sensitivity of the talks following recent speculation about the question of Britain's membership of the single currency by refusing to confirm the agenda for the meeting.
Downing Street said it was unlikely that Chancellor Kohl would repeat the trip he made with John Major to a local pub outside Chequers, strengthening the impression that the two leaders will be concentrating on the negotiations surrounding the single currency. The Government has insisted there has been no change of policy, but there have been reports that the Prime Minister is expected to make it clear before the end of the year that while Britain cannot make the first wave in 1999, it expects to join soon after, possibly by 2002.
Those reports may have been inspired by the Treasury, and Mr Kohl may want to establish whether Mr Blair is as enthusiastic for entry as the Chancellor of the Exchequer, Gordon Brown, if the conditions are right.
The decision of the Bundesbank to raise interest rates showed German determination to make sure the single currency is not as "soft" as feared.
Mr Blair may be seeking to test the water with Mr Kohl over how far Britain can maintain its influence within the EU while remaining outside the single currency for its first few years.
Whitehall sources have told The Independent that the Government is anxious to ensure it does not lose influence after ruling out membership in the first wave.
The Prime Minister is also expected to seek Chancellor Kohl's support for Britain's plans to use the six-month EU presidency, starting in January, to complete the single market and press its own plans for greater labour flexibility throughout Europe.
Britain came under further pressure yesterday to prepare for membership of the single currency from Yves-Thibault de Silguy, the EU commissioner for economic and financial matters. He said: "It is the responsibility of the UK government and Parliament.
"But it will be good for Europe, for all the member-states, to have the UK in the euro as soon as possible."
However, Tory frontbencher and leading Euro-sceptic John Redwood said joining the project would be "dangerous" and he urged the Prime Minister to "wake up and offer some leadership for a change" instead of just "pathetically" following the European Commission.
- Colin Brown, Chief Political Correspondent
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