The Vote for Europe: Blair is `running scared' on the euro, says Hague

WILLIAM HAGUE accused Tony Blair of "running scared" over the single currency yesterday as he sought to exploit the euro's weakness on the currency markets in the campaign for next week's European Parliament elections.

The new currency's poor performance has played into the hands of Mr Hague, who is progressively hardening the Tories' stance on the euro. Labour strategists admit this will boost Tory prospects on 10 June, since Eurosceptic voters will be more likely to turn out to register an anti-Brussels protest vote, and many Labour supporters will stay at home.

The euro's fall since its launch in January has posed an untimely headache for Mr Blair, who is keen to play down the single currency during a low- key campaign. "These elections are not a referendum on the single currency," Robin Cook, the Foreign Secretary, said yesterday.

Downing Street insists the Government's policy on the euro has not changed, but Mr Blair fuelled speculation that he might delay a referendum on British membership - expected soon after the next general election - by declaring two weeks ago he would not set an "arbitrary time limit" for joining.

"Our policy was always based on the euro being a proven success," one cabinet minister said, suggesting the currency's problems would allow Mr Blair to walk away if the project went pear-shaped.

A Labour source added: "Our policy is robust and flexible. It could mean a referendum early in the next parliament, but it could be held much later."

Pro-EU Tories and Liberal Democrats think Mr Blair is running for cover at the first signs of trouble for the euro. But it appears he has made a short-term tactical retreat for the duration of the Euro election campaign. Ministers say he will relaunch his drive for single currency membership next month - safe in the knowledge that the "big beasts" in the Tory jungle, Kenneth Clarke and Michael Heseltine, will be behind him.

The pair have agreed to join an all-party campaign, Britain In Europe. "Clarke and Hezza are grown-ups; they understand that politicians have to say different things in the heat of an election," said one Blairite.

But Europhile MPs have been alarmed by reports in Eurosceptic newspapers, starting in The Sun, that Mr Blair might delay a referendum until Labour's third term in office. Intriguingly, a Whitehall molehunt suggested The Sun's story originated in the Treasury rather than 10 Downing Street. But allies of both Gordon Brown and Mr Blair dismiss it as "wishful thinking" by Rupert Murdoch's paper.

Some Labour MPs detect a role reversal between Mr Blair and Mr Brown since the 1997 general election. At first, Mr Brown was keen to move quickly on the euro but the Prime Minister - anxious to maintain the coalition of press and public support he had assembled for his landslide victory - was much more cautious.

The two allies compromised on a statement in the autumn of 1997, which said Britain favoured entry in principle but would not join until five economic tests were met, effectively ruling out membership until after the next general election.

Since then, Mr Blair has warmed to the single currency, influenced by his contacts with other EU leaders. They have given him the benefit of the doubt but will not wait for ever for Britain to join the euro club. "He has been convinced that, to have real influence, you have got to be at the top table," said one minister.

One close Blair ally said: "He is a practical man, he doesn't have a Heath-like blind faith in all things European. He has left his options open; if the single currency goes wrong, he will walk away."