Draft bill for euro vote

Thursday, 5 June 2003 12:00 AM

Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown are expected to publish draft legislation later in the year, keeping open the possibility of a euro referendum before the next general election.

Ahead of the Chancellor's verdict on the crucial five economic tests next Monday, Cabinet ministers met today to discuss the thorny issue of the euro, which continues to divide Westminster and the country at large.

The PM proposed the draft bill and no minister is reported to have come forward to publicly reject the idea.

The Chancellor has been decidedly downbeat of late on the prospects of economic conditions fulfilling and matching the apparently all-determining five-tests for euro entry.

He has argued that there remains a residual dissymmetry between the euroland and UK economy, rendering 'convergence' unlikely.

A draft bill on the euro referendum would allow his credibility as guarantor of the tests to be salvaged and grant the PM a hint of euro affirmation in the not-too-distant future.

Importantly, for both sides of the euro debate, the draft Bill may not commit the government to pinpointing when to hold a referendum.

The Cabinet's final deliberations came as the Bank of England's Monetary Policy Committee left the underlying rate of borrowing unchanged at 3.75 per cent.

Meanwhile, the European Central Bank reduced interest rates further to 2 per cent.

It is widely thought Mr. Brown will tell MPs on Monday that the economic conditions for euro entry have not been met.

Outside Downing Street Mr. Brown told reporters: 'The whole Cabinet is resolved that our membership of the European Union is absolutely crucial to jobs, prosperity and growth for Britain.

'We are all resolved that a decision on the euro must be taken in the national economic interest. And it will be the national economic interest that will be the determining factor.

'And we are all resolved that must be done to put the stability of the British economy at risk. Indeed that we want to entrench that stability for the long-term for Britain.

'Everything that we will do in this matter will be in the national economic interest.'

Tory leader Iain Duncan Smith forecast the British public would reject euro membership in the short term.

On ITV Evening News this evening he said: 'They want to go into the euro and my answer to them is 'look get on with your referendum.' Agree to have a referendum now and we will vote on the euro. I believe the British people will say no.'

Tags: