Danish vote prompts calls for 'two-speed Europe'

The Danish people's resounding rejection of the euro gave renewed impetus to German and French demands for a two-speed Europe which would consign Britain to the EU's second division. And Tony Blair now finds himself under increasing pressure to delay a British referendum on the euro.

The Danish people's resounding rejection of the euro gave renewed impetus to German and French demands for a two-speed Europe which would consign Britain to the EU's second division. And Tony Blair now finds himself under increasing pressure to delay a British referendum on the euro.

Although ministers repeated that the Government's "prepare and decide" policy had not changed, senior sources suggested that it would now be extremely difficult to hold the referendum soon after the next election. The Prime Minister's office said he stood by his remarks made early on Thursday in which he said: "If the economics are right and it's the right thing to do for the country, I will go out and argue the case."

However, the weak level of the euro together with high levels of opposition in the opinion polls have bolstered those within the Government who believe an early referendum would result in an embarrassing "no" vote for Mr Blair.

Robin Cook, the Foreign Secretary, stressed yesterday that "it would be very unwise for us to close off the option" of membership of the euro.

The vote sparked fresh debate over the future of European integration, with the German Foreign Minister, Joschka Fischer, arguing that the vote underlined the urgency of bringing in sweeping reforms.

The controversial German and French plans, which could be agreed as early as the summit in Nice in December would allow a "hard core" of EU states to forge ahead with faster and deeper co-operation, leaving Britain Denmark and Sweden in the slow lane.

The euro itself was relatively unaffected by the referendum result. Fears that a Danish rejection of single currency membership would send the euro plunging to new lows proved unfounded. Although the euro fell late on Thursday night after the results were released, it rose yesterday.

But comments from Mr Fischer, who earlier this year floated controversial plans for a federal Europe with its own elected parliament, triggered political panic at the highest level in Europe.

Mr Fischer said the referendum result provided a "particular incentive" for European government to "bring the forthcoming institutional reforms of the European Union to asuccessful conclusion".