Treasury tests boost chance of early referendum on euro

The chances of a referendum on the euro before the next election were boosted last night after cabinet ministers claimed that the Treasury's economic assessment left the door open to British entry.

Supporters of the single currency were further heartened when Tony Blair used a speech in Warsaw yesterday to make an impassioned attack on the "out-of-date delusion" of Eurosceptics in Britain.

In what was seen as the first hint of the Prime Minister's tougher strategy on the euro expected after a verdict on entry to be announced on 9 June, he ridiculed tabloid claims that "a thousand years of British history" would be ended by the new EU constitution.

The long-awaited 200-page Treasury document makes clear that while joining the single currency would not yet be appropriate, the Government should not rule out the move over the next few years. The assessment, delivered to most of the Cabinet yesterday, did not give a straight "pass/fail" verdict on each of the Chancellor's five economic tests, ministerial sources said.

"It is far from the hardline anti-euro stance that some people were expecting. It certainly manages to keep the door open," one minister said. Another said that the document failed to put a "convincing" case for staying out of the euro over the medium term.

Ministers have had more than two weeks to study the Treasury's 18 volumes of technical and preliminary work on the euro, but the assessment attempts to draw conclusions from the mass of information.

The Cabinet will meet on Thursday or Friday next week for its final round of talks on the Government's announcement on the euro. Gordon Brown, the Chancellor, will deliver the agreed statement in the Commons on the following Monday.

Euro supporters were convinced the tone of the Treasury assessment paved the way for a form of words that would keep alive Mr Blair's desire for a referendum this Parliament.

In his speech in the Royal Castle in Warsaw, Mr Blair said he was winning the argument against a European "superstate" and brushed aside calls for a referendum on the constitutional treaty for the EU. But he added that entry to the euro "would be a step of such economic and constitutional significance that a referendum would be sensible and right".

He added: "My passionate belief in Europe is not born of any diminishing of my belief in Britain ... anti-Europeanism is not British patriotism, it is an out-of-date delusion."

Mr Blair made a withering attack on newspapers such as the Daily Mail, The Daily Telegraph and The Sun. "The frights and terrors about Europe designed to spook us... are just the latest in a long and undistinguished line of such propaganda," he said.

"The belief that Europe is something done to us, that everyone else spends their time ganging up on us, is a belief fit for a nation with an inferiority complex, not a proud nation that knows it can win and has proven its courage."

Mr Blair also warned that the 50-year partnership between the United States and Europe could break down because of the differences between European federalists and the American right. "Now is a crucial time, a moment either for reconciliation or for drifting apart," he said. "Let's not give up on it. It's in no one's interest to do so and I remain convinced of the vitality of the transatlantic alliance."