Britain and the Euro

The autumn political season has opened in Britain with an important signal from a senior cabinet minister that the government…

The autumn political season has opened in Britain with an important signal from a senior cabinet minister that the government's policy on joining the euro has been moved up the political agenda. Speaking in Tokyo, the Foreign Secretary, Mr Robin Cook, said the new currency had been performing well and had contributed new economic strength and a stimulus to reform to the countries that were part of it. It is an important message, given the persistently negative cast of so much British commentary on the subject.

While the basic policy of waiting to see how the euro works and encouraging British economic convergence with it stands, Mr Cook's speech signals a realisation by the cabinet that British public opinion will have to be led in that direction if the referendum promised after the next general election is to be won. Recent opinion polls show that up to 60 per cent of voters oppose Britain joining, with only 24 per cent in favour. There was a further slippage after the European elections last June, which went so badly for the Labour Party. The slippage was not surprising given that there had been so much hesitation among senior ministers in arguing a positive case for the euro. This was Mr Cook's first major speech on the subject since the 1997 election. Since then most of the running on the subject has been made by the prime minister, Mr Blair and the chancellor, Mr Brown.

There are indications now that a more co-ordinated and vigorous campaign of argument in favour of Britain's full participation in European integration will be mounted in coming months. As Mr Cook put it in Tokyo, "there will be no return to isolationism under this British government. We are determined to play a positive role in Europe and we have made Britain a key player in Europe". As for the euro, if it "brings benefits to its members, we will not let Britain lose out by staying out". They are important words from the Foreign Secretary, who is sensitive to the need for his country to exert maximum influence in the EU.

These commitments come as the Conservative Party has hardened up its opposition to the euro and allowed some of its leading members to raise the possibility of Britain withdrawing from the European Union altogether. Mr Cook is arguing the case in the cabinet that Labour must deal substantively with the question of whether to join the euro in the next election if it is credibly to hold a referendum soon after it. It would not be possible to leave it open in the hope that this would allow some voters to vote Labour and then against the new currency. Other ministers, Mr Brown reportedly among them, believe it could be disastrous for Labour to risk losing a referendum and that it is wiser to remain cautious on the question.

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Ireland has an interest in this debate because the UK remains our largest trading partner. Our interest would intensify if sterling's value were to fall sharply or if it were to enter the euro at a very competitive rate. But it must be recognised that sterling has remained strong without adversely affecting the British economy. For so long as that lasts the issue is not so pressing from the Irish point of view - on the contrary, indeed, the present arrangement suits those who are exporting profitably from here to the UK market.