Chancellor rocks boat

EU summit: Peace over beef, but Clarke statement in favour of single currency opens Tory wounds

PLANS by John Major for a new Euro-sceptic battle with Brussels were instantly derailed yesterday when the Chancellor, Kenneth Clarke, publicly held out the prospect of Britain joining a single currency in 1999.

Mr Clarke's pro-European intervention contrasted sharply with proposals being drawn up by Mr Major's closest advisers to push negotiations on Europe's future to an early conclusion, strike a sceptical pose and then challenge Labour to do the same.

Asked at the European summit in Florence if Britain might be in the first wave of countries joining monetary union in 1999, Mr Clarke said: "Yes, I think we might. I can conceive of circumstances in which it would be in British interests to join EMU and I can see circumstances where we can be in the first wave."

He flatly rejected suggestions from John Redwood, the former Cabinet minister, that the Tories should fight the next election on a platform of opposition to the single currency.

Although Mr Clarke's comments are within the letter of Government policy, his language was strikingly positive. In stark contrast, Mr Major, asked on the Today programme about the single currency and other issues, replied: "We will make a decision on each of these matters on the basis of what we think is right for this country and if that means saying 'no', we will say 'no'."

With Euro-sceptics at Westminster grudging in their backing for Mr Major's deal on beef, the Chancellor's intervention can only raise tensions within the Tory party. It also puts a question mark over his role in Mr Major's planned tough new campaign in the forthcoming Inter-Governmental Conference.

He plans to press a series of demands which are bound to cause conflict with other EU countries. Aides believe this will highlight Europe as "one of the major battlegrounds for the election". Mr Major hopes to exploit moves to have a draft of a new treaty available at the Dublin summit later this year.

A source said: "The draft treaty will expose areas where there are things we are determined to change and the Labour Party will be put on the spot to say what they think about it." British demands will include one that health and safety grounds must not be used to force through measures which Britain believes should be covered by Britain's Social Chapter opt- out. Mr Major will also push for subsidiarity (the principle that matters are dealt with at national level so far as possible) to be entrenched in the treaty. A senior source said: "There are a number of areas where we think there are clear differences between Conservatives and Labour, and Europe is one of these."

However, Britain's disruption has demonstrated to the rest of Europe the importance of securing greater majority voting and Mr Major reacted angrily to suggestions from other European leaders that Britain will pay a high price for its non-cooperation. "If anyone thinks they can threaten us like that, they are in for a very nasty shock," he said.

Jacques Santer, the Commission President, said: "It is a pity that we had to go through a phase of disruption of the Union's institutions. This should not have happened and it should never happen again. In a crisis like this there are no winners, only losers."

Meanwhile Jacques Chirac, the French President, undermined claims that the beef war was over, saying that the framework only set out the "potential" ways of easing the export ban. "There is no reason to believe it is over," he said.