Don't be fooled: Brown is still holding many of the cards

A huge effort was under way yesterday - starting with Tony Blair's exhaustive round of calls to European leaders - to convince the world that the Commons statement by the Chancellor decisively paved the way, at long last, for Britain's entry to the single currency.

Quite a lot can be adduced in favour of this proposition, and optimistic pro-Europeans will try to do just that. The Chancellor has not spoken in such terms before about the economic benefits of the single currency, particularly in its impact on trade and growth. He muted his natural tendency to define British economic success in terms of the corresponding failures of the rest of Europe. He actually defended - in considerably less perfunctory terms than in the past - the principle of British entry which has theoretically been government policy for six long years. You could even get an occasional glimpse, as never before, of how effective - and indispensable - he would be in a referendum on the subject if and when he chooses to back one.

But that is very far from being sure that this was the defining moment Mr Blair was no doubt trying - allegedly with some success - to persuade his European counterparts it was. He did not, for example, set any kind of timetable for entry or for the process on which he said the Government would embark to achieve the convergence which he insists still eludes it on several key points. And he didn't have much encouragement for those analysts who believe that convergence - strikingly greater than it was in 1997 - may be as good as it will get and that the window for entry may actually be rather a narrow one. They would have preferred him to say something like: "We're pretty well there but we need another year to be sure and, if we are, we'll go for it."

Indeed, listening to him it was impossible not to reflect for a moment on what might have been. Next year - probably the last that a referendum could realistically be held if it was to be in this Parliament - will see the 10th anniversary of John Smith's death as well of Tony Blair becoming leader of the Labour Party in his place. It is hard not to speculate on what Mr Smith would have done about EMU had he lived to become Prime Minister. It's true that he shared a little of Gordon Brown's Scottish caution. But his Europeanism, like his Atlanticism, was more deeply ingrained than that of any other Labour leader before him - like that of his old friend Roy Hattersley who made a strong case for early entry last weekend. He had been one of the celebrated 69 Labour MPs who had rebelled against a Labour three-line whip so that they could back the Conservative government's Bill to take Britain into the Common Market in the early Seventies. And he certainly intended to take Britain into the single currency when it was launched, intending a referendum early in his first parliament as Labour leader. Maybe he would have been diverted from that course for what were - then - some sound economic reasons. But it's also likely that we would be rather further down the road to the single currency than we are now. If nothing else, Mr Smith was much less mesmerised by the Eurosceptic press than Mr Blair and Mr Brown have been at different times over the past six years.

But Mr Smith was not a New Labour figure. And yesterday was a quintessentially New Labour operation. It was, for a start, capable of many and in some cases diametrically opposite interpretations, including the question of whether it reflected a non-decision, a decision deferred or a decision taken that pretended not to be one.

From a pro-European standpoint it was, at least presentationally, a big improvement on the bald statement ruling out entry in this Parliament that Mr Brown would have ideally preferred. And he played the part scripted in the laborious discussions over the past few weeks between himself and Mr Blair, to the extent that one of the Chancellor's closest aides was able to say unblinkingly after the statement that a referendum would indeed be possible next autumn.

Theoretically, yes. But it's hard to see, for example, how the much-vaunted promise of reforms to the housing market could be achieved between November, when the Chancellor will have the outcome of the studies he has commissioned on the subject, and next summer, when a decision to call a 2004 referendum would have to be taken. One of Michael Howard's most telling points was exactly that: the extreme difficulty of turning the perceived negatives into positives in the lifetime of this Parliament, within which the Prime Minister has - whether recklessly or not - told several important people he still expects a referendum.

Indeed, one of the more dispiriting aspects of yesterday is precisely the length of time it has taken the Government to embark on policies that were desirable in themselves - as well as euro-friendly. In some cases - like beginning to localise pay-bargaining and encouraging greater use of fixed-rate mortgages, they could and should have been tried much earlier. In others - like the wearisomely familiar promise to make the patriotic case for Europe - much more should have been done by the Government from Mr Blair down at the optimal times to do just that - the general elections of 1997 and 2001.

Maybe I am too scarred by falling, inexcusably, for the Blairite hype of October 1997 that the Chancellor's Commons performance in that month was a turning point, when in fact it ushered in nearly six years of masterly inactivity in relation to euro-entry. The dynamic of politics - including the impenetrable mysteries of the Blair-Brown relationship - remains unpredictable. Mr Blair, who still wants the referendum before the next election and by most accounts thinks, or at least says he thinks, it is do-able, is also said to have been encouraged by some of the "intellectual" conversations he has had - at least those alone and without advisers - with the Chancellor on the issue. But it is highly doubtful, to put it mildly, whether Mr Brown has yet made what would be for him the mental leap of contemplating a referendum before a good deal longer than that. And Mr Brown has emerged from the process that culminated in yesterday's statement still indisputably holding very many of the cards.

A great deal will depend on whether the "reform agenda to meet the five tests" - including on housing and pay - unveiled yesterday has merely to be put into place or whether it will actually bear real fruit before Mr Brown is ready to take the risks that he believes cannot yet be taken by a decision to hold a referendum. If the latter, then forget about a referendum in this Parliament and perhaps for a long time after that.

From the point of view of those who believe that the weight of the Treasury's exhaustive studies point more towards euro entry than against it, this is perhaps the best, the very best that can be said after yesterday: it won't take us too long to find out whether the Chancellor's statement was a genuinely defining moment or just a clever way of publicly getting round a deep disagreement between himself and the man he hopes to succeed.