Brown edges closer to euro as calls grow for early referendum

THE GOVERNMENT moved a step closer to joining the single European currency yesterday with ministers signalling that it was no longer "if" but "when" Britain would join.

The biggest push so far towards joining the euro triggered fresh demands for an early referendum from MPs on both sides of the House.

The Chancellor, Gordon Brown, told a CBI conference he would publish the change-over plan detailing how Britain would switch from sterling to the euro in January, when other leading European nations join the first wave.

"We are changing gear because it is getting so near," said a senior Treasury source. "It's all planned out so that if we have a referendum and the country votes yes, we are ready."

The Secretary of State for Trade and Industry, Peter Mandelson, told the CBI conference "It would be economic lunacy for the sake of Eurosceptic ideology to marginalise British business on the sidelines of what should be its own market".

The momentum towards entry to the euro came as Mr Brown prepared to tell Parliament today in his pre-Budget statement that he is lowering his expectations for growth next year, but he is sticking to his pounds 40bn plans for spending on health and education, and raising borrowing if necessary to fund a gap in finances.

The new German Chancellor, Gerhard Schroder, added to speculation by telling the CBI "we soon hope to be able to welcome the UK into our midst".He also praised the way the Government was "cleverly plotting" Britain's entry.

Business leaders at the CBI conference interpreted the ministerial remarks as a clear change in preparations to join the single currency.

After his speech, Mr Mandelson said: "The signal that the Chancellor and I have sent today is that the British government supports the principle of the single currency and recognises the advantages and strengths of being inside."

Mr Mandelson said it was not an option to join in the first wave but the timing of entry had to be kept under review.

There were calls for an early referendum by the Labour MP Brian Sedgemore and Nicholas Soames, the Tory MP. Calling a referendum on the euro before the general election would need a change of policy by the Government. But sceptics and pro-European MPs said the recession could force the Government to declare its intention of joining the second wave.

The Chancellor told MPs a year ago that if the economic benefits were clear, there was no constitutional bar to entry. He judged it was not realistic to join the euro in this Parliament, "barring some fundamental and unforeseen change in economic circumstances".

A former Labour Treasury minister said: "Brown and Mandelson want to enter the euro. The only question is what will Tony Blair do? He is running scared of Murdoch. It's a question now of whether we can persuade The Sun."

Michael Ancram, the Tory party chairman, said: "They want to try to bounce the British public into a decision on this in preparation for a referendum."

The Tory MEP John Stevens said: "The Government is signalling that it might be thinking about doing a u-turn... about the euro because they have a grade-A problem with going into recession."

The Government and the CBI executive were also attacked by Lord Marsh, the head of an anti-euro campaign, for forming an "unholy alliance" to stifle debate. Angry delegates protested there was no discussion of the euro at the CBI conference.

As part of the moves toward entry to the euro, Mr Brown appointed the Labour backbench MP, Michael Wills, to a cross-party committee of MPs to oversee the change-over plans. The Tories and the Liberal Democrats are also being offered seats.