Blair and Cook warm to euro but the Chancellor stays cool

A CABINET battle broke out last night over Labour's policy on the single currency when Tony Blair and Robin Cook, the Foreign Secretary, rejected Gordon Brown's more sceptical approach towards early entry for Britain.

In separate speeches, the Prime Minister and the Foreign Secretary suggested that Britain would lose influence on the world stage if it remained outside the euro.

Although Mr Blair and Mr Cook restated the Government's policy of joining once five economic tests are met, their positive tone contrasted with Mr Brown's recent cooling. He wants to delay the referendum planned for early in the next parliament.

Mr Blair told the Lord Mayor's Banquet at Guildhall in London: "For Britain to be hostile to the concept [of the euro] and spend our time attacking it and undermining it would be just plain bad foreign policy, let alone domestic economics. We want monetary union to succeed."

The Prime Minister said Britain faced a stark choice on Europe. Outside the EU, the country would have reduced influence on the world stage. Britain could play a pivotal, dynamic role in shaping the world, but only by "rejecting the siren voices of isolation and embracing wholehearted engagement and participation in the outside world".

Mr Cook told the Commons last night that Britain, one of four EU countries not to join the single currency at its launch in January, could soon be the only member state outside the eurozone. A decision on entry would have to be made by giving honest answers to questions that reflect the real world.

Today the Foreign Secretary will tell the "Britain in Europe" group: "It is folly to pretend Britain has an alternative destiny outside Europe."

Mr Cook will accuse Eurosceptics of putting at risk many British jobs that depend on the country's relationship with the EU. People in the US are becoming nervous, he will say, as Britain's traditional role as a bridge between the EU and America is in jeopardy.