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Brown will not repeat ERM fiasco, say allies

Andrew Grice
Monday 16 September 2002 19:00 EDT
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Allies of Gordon Brown marked the 10th anniversary of Britain's exit from the European exchange rate mechanism (ERM) yesterday by vowing that he would not make the same mistake as the Tories by rushing into the euro.

In the latest signal from the Brown camp that the Chancellor is sceptical about an early referendum on the single currency, his allies said he had no intention of throwing the Tories a lifeline by getting wrong the most crucial decision facing the Government.

Tony Blair remains keen on a referendum before the next general election but there are growing signs that Mr Brown wants to delay the move until the next Parliament.

One ally of the Chancellor said: "He believes that good economics make good politics. He has no intention of repeating the disastrous errors that the Tories made with the ERM." Mr Brown wants the Treasury's assessment of his five economic tests to take account of the lessons from the 1992 ERM debacle. He also wants to consider whether joining the euro at this stage could jeopardise Britain's economic stability by forcing him to raise taxes or cut spending.

Charles Kennedy, the Liberal Democrat leader, predicts today that a referendum will not take place in this Parliament. He told Scotland's The Herald newspaper in an interview that the euro has been sidelined because Mr Blair's strategy is to focus on one big issue at a time, and "Iraq is the issue of the day."

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