Review of single currency on hold

Tony Blair's hopes for joining the euro were virtually buried by the Chancellor yesterday with an announcement that he is abandoning any review of the single currency for at least a year.

Tony Blair's hopes for joining the euro were virtually buried by the Chancellor yesterday with an announcement that he is abandoning any review of the single currency for at least a year.

Pro-euro Labour MPs were dismayed. One former minister said: "Gordon has binned the euro. I was absolutely astonished when he said that, and he slipped over it quickly so hardly anybody noticed."

In his Budget statement, Mr Brown said he did not propose to initiate a further euro assessment, even though he had promised in the past to do so every year.

Earlier, the Prime Minister's official spokesman said Mr Blair had not abandoned hope of Britain joining the euro. But he made it clear Mr Blair accepted there was little chance while Mr Brown remains at the helm in the Treasury.

"In terms of the euro - no, the Prime Minister has not given up on the euro, but the economic conditions have to be right. Therefore, the position has not changed," said the spokesman.

If Mr Blair does move Mr Brown after the election it may reopen the speculation that a new Chancellor would look again at the euro. However, the Prime Minister is focusing on winning the referendum on the European constitution, and is being advised to fight one battle at a time.

The Chancellor's reservations about the euro were underlined in a Treasury document published with the Budget. It compared the economies of EU member states unfavourably with Labour markets in the US and Japan for being too inflexible to withstand economic shocks.