Britain under pressure to come clean on euro

Friends and foes alike urged Prime Minister Tony Blair to come clean on Britain`s euro plans after a senior minister said legislation for a referendum could be framed this year.

Following a long government silence on its intentions regarding the single currency, debate went into overdrive last week with a highly positive intervention by Blair himself.

Blair said it would be a "betrayal" of British interests to allow politics to halt euro entry and "overwhelmingly" in its favour to join the euro if the economic case were there.

Britain is one of only three 15 EU members that has not adopted the new European currency and currency markets and political observers read every English tea leaf to gauge when and if Britons might dump the pound.

At last, said euro supporters following Blair`s warm words, Britain is ready to bite the bullet and start laying plans for a national referendum on joining the single currency.

And no sooner had Blair sent his `all-systems-go` signal than pro-euro Transport Secretary Stephen Byers followed up even more forcefully with an apparent timetable for a referendum.

In what he thought was an off-the-record aside to journalists, Byers said the government could include a bill setting up the structure for a euro vote in its legislative slate for the next parliamentary session beginning in November.

That timetable would put a big question mark over the government`s long-held commitment to wait until it has assessed the economic case for joining, which it has pledged to do by the middle of next year.

Blair`s official spokesman swiftly dismissed Byers` idea. "It is wrong to suggest there are any plans for legislation unless and until the five tests are met," he said.

But even if a bill to pave the way for a referendum is not flagged up in advance, senior minister Robin Cook - who manages government bills as they go through parliament - said one could quickly be drafted if the government decided to press ahead.

"Bringing forward legislation on a referendum is not a difficult exercise," Cook told reporters.

So what exactly is going on - and when? "If the prime minister wants Britain to adopt the single currency he should say and name a date for the people to decide," opposition Conservative leader Iain Duncan Smith, who would never join the euro, told businessmen in the Midlands.

Byers` comments, along with those of Blair and Cook, have convinced Westminster watchers that euro policy is finally on the move. The financial markets, which have long doubted Britain`s ability to adopt the new currency because of its economic differences with its EU partners, are also beginning to wonder.

Sterling fell to six-and-a-half month lows against the euro on Friday. "If Mr Blair does wish to take the UK into EMU during the current parliament, then the results of the five tests will need to be announced soon, and likely by the end of this year," said George Buckley, UK economist at Deutsche Bank.

Pro-euro Liberal Democrats, Britain`s third party, are just as eager as the anti-euro Conservatives for clarity on the government`s plans.

"The prime minister has decided on a referendum but won`t admit it," Treasury spokesman Matthew Taylor said. "If the government wants to win support for the euro they will find that honesty is the best policy. They should set out the timetable."

Peter Mandelson, a former minister and close Blair ally, insisted the "prepare and decide" policy was intact. But like Cook, he said once a decision was made things would move fast.

In Britain`s 1975 referendum on membership of the European Community, the government made a decision in March, a bill was passed a month later and a referendum took place in June, he said. "If there is a referendum next year... that is what I believe the timetable will be," Mandelson told BBC Radio.