Suddenly it's no longer whether we embrace the euro, but when

Pennies are beginning to drop in Whitehall about the exchange rate at which Britain would go in

HERE'S A dog that didn't bark. Interest rates went down half a point yesterday, and the decision was read entirely for its effect on the domestic economy. The announcement was widely welcomed. But almost nobody said: "Aha, that means we're moving closer to European interest rate levels; we must be on the way into EMU." Hardly surprising, you may say. After all, hasn't half of industry, the Tories and even the odd government minister, been screaming for just that sort of help from the Bank of England for a distinctly domestic reason - to lift fears of recession and inject some impetus into manufacturing?

Except that before the Chancellor's "prepare and decide" statement in the Commons in October 1997, nearly - though not quite entirely - ruling out EMU entry before the next election, that's just how it would have been read. That was, remember, a period when every nuance, every twitch of ministerial body language, every decision - including even, for a while, the momentous one of making the Bank of England independent - was read as having an EMU-related meaning. Not any more. To a surprisingly large extent, EMU is a topic that has been airlifted out of British politics - for now.

True, this week there was a flurry when Gordon Brown and Peter Mandelson both made warm noises about the single currency in speeches to an appreciative CBI. Mr Mandelson went even further and, in a breach of the letter of government policy, used the "when" word instead of the "if" word about British entry into EMU. The entrails were examined, the augurs pondered. Was Mr Mandelson, not for the first time, part of a deep-laid plot? Was he licensed by the Prime Minister to trail a change of policy to a new one of setting a date for British entry? The truth, it turns out, is more prosaic. It was a slip - though perhaps a Freudian one, given the Trade Secretary's well known pro-European views. Mr Mandelson was not trying to change policy, even supposing he could do so.

On Wednesday, after a suitable interval, the Prime Minister pronounced. Nothing had changed, he made clear. The British Government would decide on entry if and when it regarded it to be in British interests. In this he has the powerful support of the Chancellor, whose preference for not taking too early a decision to join is identical to the Prime Minister's.

Nevertheless, below the surface the issue is just a little more unstable than it looks. For a start, some EMU supporters outside the Government are becoming increasingly restive. It used to be blithely assumed by those in the pro-EMU camp (and by a few faint hearts on the other side) that the forces of pro-Europeanism would be invincible and that the quarrelsome band of anti-single-currency campaigners would be outclassed, outweighed and, above all, outfunded by their opponents.

Moreover, mainstream business opinion appears to be significantly hardening in favour of EMU.

Yet at the same time, the relative cohesiveness of the embryonic pro- EMU campaign is not as easily guaranteed as it was. Pennies are beginning to drop in Whitehall about the complexity of second-wave accession negotiations, about the length of time (perhaps four years after a referendum) it will take for all the conversions to be made, and - a delicate question - about the exchange rate at which Britain would go in. Some CBI members, not to mention the far from negligibly influential TUC, might lose their enthusiasm if the level were too high.

Not only, moreover, are the antis beginning to get their act - and funds - together, but there are now a few tensions in the pro-EMU ranks. The obvious vehicle for such a campaign is the all-party European Movement. But a campaign needs some more imposing figureheads, which is one reason why Lord Hollick has been drafted into an as-yet-undefined role in mobilising pro-EMU opinion. But then, some of the most prominent Tory pro-Europeans whose support would certainly be needed for such a campaign are less than comfortable with the idea that Lord Hollick, powerful player though he is, should be running the show. They would prefer someone as prominent but more neutral, with fewer direct links to New Labour.

But this is a second-order issue beside the larger political question: how firm, exactly, are Mr Blair's intentions? While one side of the divided Tory party never ceases to condemn Mr Blair for being too warmly disposed towards EMU, the other is increasingly worried that he isn't warmly disposed enough.The problem for the most powerful Tory pro-Europeans, up to and including Kenneth Clarke and Michael Heseltine, is that they can hardly be expected to burn their bridges with their own party by taking on high- profile roles in an all-party EMU campaign, without being sure that Mr Blair has finally decided on entry.

Mr Blair is said to understand this very well. But the worried tendency wants more than understanding. Some of them believe that it will take a prolonged and active campaign to win over a still sceptical public opinion. And that, they believe, could only start on a convincingly all- party basis if Mr Blair acted, not necessarily by calling a referendum before the next election, but by making it clear that he intends to go in.

Such a pre-election declaration would also encourage much of British business to be less sluggish about their physical preparations for EMU.

There are powerful, possibly decisive, counter-arguments, much deployed in Whitehall. Much better to let the British, as traders, travellers and employees, get quietly used to the euro being around than provoke a nationally divisive debate on it now. Much better to prevent the "when" question dogging the Government, as that on ERM did the Thatcher administration with catastrophic results. Much better to let the issue lie fallow until it can be revived without reminding the electorate of the damaging divisions of the Tory years. Much better finally to go into the next election saying "We will decide and put it to the British people", against the Tories' "We've already decided, and we won't."

That is persuasive as far as it goes. Nevertheless, Mr Blair will need to take care of the business constituency that Labour is so proud of having secured. He may well be right that now is not the time to declare his hand, or to start the big pro-European campaign that some EMU enthusiasts would like. It is still altogether possible that the first few months of the euro next year - thanks to the gulf between the European Central Bank and the governments of Europe - could be on the turbulent side.

Nevertheless he, as well as Mr Brown and Mr Mandelson, may need to start ratcheting up his pro-European rhetoric again, some time next year. Only some of the corporate sector's alleged restiveness about regulation and tax is got up by the Tories; he will not want to risk losing them on Europe.