Despite denials over the past week, it now looks increasingly likely that there will be a British euro referendum in spring 2003.
Observers believe that May Day 2003 has been pencilled in for the referendum and that Chancellor Gordon Brown will be forced to go along with this.
Last week, Prime Minister Tony Blair's chief EU policy adviser, Mr Roger Liddle, told a "private" meeting of Labour Party members of the European Parliament that the government had "pencilled-in" spring 2003 for a euro referendum. Close observers say that, despite strenuous government denials, Mr Liddle may have been naive, but he was not wrong.
According to Medley Global Advisers, the war against terrorism has boosted Mr Blair's political standing and self-confidence and firmed up his determination to bring sterling into the euro zone within this parliament - as long as the economic tests are met. That is generally considered to mean no more than a 60 per cent disapproval rating for EMU entry.
This assumes that Mr Brown plays along. There is an argument that his chance to put an end to the project has passed and he has to decide whether to go along with it or oppose it. He could also stall on the five economic tests or, in the worst case, ensure that his treasury would announce it had failed, but this is not thought likely.
Some of the Prime Minister's people argue that Mr Brown's position is not quite as unassailable as it was several months ago. In some areas he is finding himself eclipsed by more junior ministers such as Foreign Secretary Jack Straw, while the economic slowdown is making some of his spending allocations look very shaky. On top of this, rising unemployment and possible hikes in social security contributions to pay for a rising defence budget could erode his position further.
But there is also speculation about possible sweeteners, such as the Prime Minister supporting his Chancellor for the leadership the next time around on the basis that he will not step down until Britain is set to join the euro - although that remains speculation for now.
The argument is that Mr Blair has decided to resolve Britain's relationship with Europe. He is said to believe that Britain lacks influence outside the euro.
Given his new relationship with the US, Britain could have global influence out of all proportion to its size.
His recent speech to the Labour Party conference is considered vital. "If [Brown's five tests] are met we should join and, if met in this parliament, we should have the courage of our argument to ask the British people for their consent in this parliament."
There was some argument from the treasury that this said nothing new, but others argue that the key was the insertion of "courage". It is also arguably tied into his reading of events post-September 11th.
Not only does he argue that this was a uniquely catastrophic event for the US, and that Europe must recognise this, he has been making a point of working very closely with the other European states.
But all of this assumes that a referendum can be won. At the moment, the polls are roughly showing 50 per cent against and 35 per cent for, while 15 per cent don't knows. Last year's Danish referendum on euro-zone membership started with a stronger "yes" vote in the opinion polls and its government still lost.
According to Medley, the "yes" team wants to build a campaign on "insecurity, inevitability and admiration". For example, the biggest single group among the undecided are those who do not want to join the euro zone now - but say they would in two to three years.
There is also a feeling of inevitability. Polls show that 52 per cent believe Britain will be in the euro zone by 2005, and 34 per cent do not. This rises to 74 per cent against and 12 per cent for in 2010. Finally, assuming that the war against terrorism goes to plan, Mr Blair will have enough kudos to persuade many.
If known euro doubters such as Mr Brown and Mr Straw also join the effort, it may be enough to convince many that their interest may be best served by being on the inside.
Preparations have started and are being overseen by Mr Straw and Mr Peter Hain. They are preparing to tar euro-sceptics with the unpatriotic brush and link opposition to the euro with crazy isolationism. The campaign will argue that euro-zone states have benefited from the currency, Britain has lost influence by staying out, and the euro will cut inflation and mortgage payments.
The logic behind a May Day poll is that it would coincide with municipal elections in England, Wales and Scotland, and regional elections in Scotland, Wales and Northern Ireland. It is still thought possible, depending on the polls, that Blair would opt instead for autumn 2003 or even doubling up the next general election with a euro vote. This would mean the announcement of a referendum bill in the November 2002 Queen's Speech.
Such a move would undoubtedly be greeted with enthusiasm in the Republic. One of the biggest economic threats we face is that, in this difficult climate, sterling and the dollar would weaken considerably, leading to a real loss of competitiveness. Sterling entry may weaken the currency but it would also add certainty, a commodity that is in short supply at the moment.
