BRITAIN: Chancellor Gordon Brown revealed Westminster's worst-kept secret yesterday when he confirmed that the Treasury's five economic tests for British membership of the euro have not been met, writes Frank Millar, London Editor
At the same time Mr Brown affirmed the British government's intention to join the single currency "if the economics are right for Britain" and promised a new campaign to build "a modern long-term and deep-seated pro-European consensus in Britain about Britain's role in Europe and Europe's role in the world".
The first stage of that campaign will see Mr Brown join the Prime Minister, Mr Tony Blair, at a Downing Street press conference this morning in a display of unity which Labour europhiles know is vital to any attempt to shift majority support behind the euro.
Masking the continuing uncertainty over Britain's intentions, Mr Brown yesterday deployed surprisingly upbeat pro-European rhetoric promising major reforms which the Government would implement in the next year in an effort to overcome existing "structural differences" and assist the process of achieving "sustainable and durable convergence" of the British and Euro-zone economies. These, he said, would greatly assist the process of achieving such convergence "and the flexibility necessary for Britain to succeed sustainably within the euro zone and realise its potential for trade and investment".
The Chancellor said he would report on progress made by the time of next year's budget, at which point he would decide whether to conduct another assessment of all five tests, so allowing the possibility of a referendum on the issue before the next general election.
The Conservative shadow chancellor, Mr Michael Howard, claimed the possibility of a second assessment of the tests during the present parliament marked a "humiliating" climbdown by the chancellor. It also encouraged Mr Peter Mandelson - former Northern Ireland Secretary and a leading europhile - to claim the chancellor's statement had taken the government closer to joining the single currency.
"There is a credible timetable in place, with remaining economic obstacles and reforms to be worked on in the coming year. It is now up to the government to deliver these changes", he said. "This does not produce the certainty but the distinct possibility of a referendum during this parliament."
However, while Labour's euro enthusiasts put the best possible "spin" on Mr Brown's statement, the Liberal Democrat spokesman, Mr Matthew Taylor, said it was no surprise that Mr Blair looked "gloomy" as he delivered it because the prime minister still had "no idea" if or when the British people would be given the opportunity to decide the issue. While welcoming Mr Brown's positive language, Mr Taylor said the chancellor's policy remained like that of the previous Conservative government, namely one of "wait and see", while his decision yesterday had in truth been "no".
The Scottish National Party MP Mr Alex Salmond described the Treasury's assessment as "the longest don't know in political history" while Mr Howard gleefully mocked prime minister and chancellor, saying they were "united in rivalry - each determined to do the other down" and that they had only put off the referendum because they knew they couldn't win it.
Mr Brown's reforms included a request for interim reports by the pre-Budget stage on the step changes needed in the planning and supply of housing and on the market for long-term fixed rate mortgages. In a move which may provoke trade union opposition, he also announced that by next year all pay remits for public sector bodies would include a regional or local pay dimension. Along with yesterday's publication of the full version of the British changeover plan, Mr Brown also confirmed a draft referendum bill would be published in the autumn.