Shocked ministers wonder where they can go now

Danish Reaction

Close to tears, as she gathered with fellow EU ministers in Brussels yesterday, Marianne Jelved, the Danish Economics Minister, described the referendum on the euro as "the worst day of my political life" .

Close to tears, as she gathered with fellow EU ministers in Brussels yesterday, Marianne Jelved, the Danish Economics Minister, described the referendum on the euro as "the worst day of my political life" .

Like the rest of Denmark's political élite Ms Jelved woke yesterday to news of higher interest rates and predictions that her country will be consigned to Europe's second division.

Only a few hours before she had been at the heart of the failed pro-euro campaign when the results reached the Copenhagen parliament, and the emotion of it all may have got to her. "I have the best colleagues in the world," she said of the other 14 ministers. "They have been very warm today, so much that I fear for my tears."

Such generosity was not shared back home by Denmark's one Eurosceptic tabloid, Ekstra Bladet, which branded Ms Jelved the country's "playground supervisor". That was mild by the standards of a newspaper whose banner headline screamed "Nyrup is crushed", picturing the beleaguered and haggard-looking pro-euro Prime Minister, Poul Nyrup Rasmussen, in his moment of defeat.

The electoral blow, delivered on a massive turnout, was all the greater because of the powerful forces ranged in favour of the single currency, including all the main newspapers bar two and the business and trade union organisations.

At 9am came the first sign of economic consequences of the decision when Denmark's central bank raised its key interest rates by half a percentage point in an attempt to defend the krone. The "yes" campaign had warned of higher borrowing costs in the event of a rejection of the currency, but being proved correct was of little consolation.

But it was first and foremost a political catastrophe, one which blew a hole in the Danish government's European policy. It now faces constant harrying from its opponents in the run-up to new treaty changes due to be agreed in Nice in December.

Shell-shocked politicians agreed that the danger of a two-speed Europe is now very real. Mogens Lykketoft, the Denmark's social democratic Finance Minister and a supporter of the euro, said: "We can only fear that this will spark a Union of different speeds." The risk, he added, was that Denmark would be "left behind".

That sentiment was even echoed by a leading "no" campaigners, Holger K Nielsen, leader of the left-wing Socialist People's Party, who said it would be "difficult to avoid" such an outcome.

The scale of the setback took politicians by surprise. In the 1998 referendum on the Amsterdam Treaty, the "yes" side scored 55.1 per cent of the vote as against 44.9 per cent for opponents. On Thursday 46.9 per cent backed the euro, with 53.1 per cent saying "nej".

Eurosceptic gains were chalked up across the country.Although the "yes" camp took western Jutland, a rural area dominated by farming and fishing, the opponents of the single currency won out across swathes of the rest of Jutland, underlining a significant change in Danish politics.

According to Professor Hans Jogen Nielsen of Copenhagen University, the countryside was once the heartland of support for the European project, as farmers and fishermen fell in love with subsidy-rich Brussels. By contrast the big Danish cities were bastions of Euroscepticism. That pattern was decisively broken on Thursday. Meanwhile the anticipated increase in support for the euro among city-dwellers failed to materialise.

Not surprisingly, yesterday's newspapers produced a blend of bitter recrimination and soul-searching. Mr Rasmussen was singled out for attack by Berlingske Tidende, which said the gap between the two sides could "have been narrowed if the 'yes' side, with the Prime Minister at its head, had not made so many unbelievable own-goals from start to finish." While the result is a humiliation for the Prime Minister, it will probably not be lethal. A lanky, melancholic figure, Mr Rasmussen signalled his determination to cling to office. He is aided in his fight for survival by the fact that his main rival, Anders Fogh Rasmussen, leader of the Venstre party, also campaigned for the "yes" side.

Even the "no" side was showing signs of discord, in their case over the glory claimed by Pia Kjaersgaard, the leader of the far-right Danish People's Party.Other opponents of the euro said that more social democrats had backed their cause than supporters of her party.

There was consensus, however, that Denmark needs a new European policy. Mr Rasmussen is already talking of a new contract between national capitals and the EU, defining clearly which would be responsible for what. The idea has not satisfied opponents because it is planned for after the Nice summit. Eurosceptics are even threatening a legal challenge to force any deal signed at Nice to go to another referendum next year.