Portillo hints at UK exit from EU

THE CABINET's leading Eurosceptic, Michael Portillo, yesterday spelt out a tough new line on Europe, hinting that Britain should quit the EU rather than submit to Euro-federalism.

Mr Portillo, Secretary of State for Employment, also said that the Government would make the defence of national sovereignty an issue in the next general election. In Llangollen yesterday, Mr Portillo told the Welsh Conservative Party conference that membership of the EU was in Britain's economic interest. But he added: "We will not allow ourselves to be dragged on the back of that along the path to folly. We won't be carried towards a federal Europe. And if we ever have to make a choice, it will be for Britain's sovereign interest."

His allies said Mr Portillo was not contemplating withdrawal from Europe should Britain be faced with any further concessions at the forthcoming inter-governmental conference. "That is not the point he is making," one said last night, adding that Britain would only face a choice if it was confronted with the pros-pect of fully-fledged federalism.

Mr Portillo's intervention came as France supported British calls for a study into the impact of a single currency, after an Anglo-French summit which British officials claimed could herald a new understanding between the two countries.

The move by the French president, Jacques Chirac, was seen as a softening of the French line over monetary union, by placing a new emphasis on the impact of a single currency on those countries unable to join.

Mr Chirac made his comments at a joint press conference with Mr Major, after two hours of talks in Paris. Mr Chirac stressed the importance of both Germany and Britain to Europe in a way that made the Franco-British relationship in Europe sound almost as important as the Franco-German alliance.

"The quality of the Franco-German relationship," Mr Chir-ac said, "is essential for European construction to prog-ress. It is necessary, but not sufficient. We cannot build Europe without Britain."

Mr Major said a large part of yesterday's talks had been taken up with the issue of the single currency, and described Mr Chirac's approach as "a breath of fresh air". Afterwards, British officials said there was a clear sense of a new "triangular relationship" between Britain, France and Germany. David Davis, minister for Europe, added: "This is very good. It shows that the French government recognises that the British position is one designed to secure a Europe that is successful."

On the single currency, Mr Chirac said: "The consequences of a single currency introduced by five, six or seven countries on the economic situation of Europe as a whole - including on those countries not in the EMU - have been insufficiently studied.'' .

Although Mr Chirac stressed that France intended to meet the criteria for joining a single currency by 1999, he confirmed what the president of the European Commission, Jacques Santer, said the previous evening - that the European summit at Cannes in two weeks' time would not even discuss the subject of a name for the single currency.

Both points suggest a step back by Mr Chirac from his position during the presidential election campaign, where he said he was in favour of a single currency.