Clarke tells Blair: go for euro now

KENNETH CLARKE has accused Tony Blair of losing his nerve over Europe, and urged him to declare now that Britain intends to join the single currency in the next few years.

In his most positive statement on economic and monetary union (EMU), the former Tory Chancellor makes clear his preference for joining in January 2002, when euro notes and coins start circulating.

His broadside will widen the gulf between him and William Hague, his party leader. But he directs his main fire at Mr Blair, accusing him of running scared of public debate to avoid alienating Eurosceptic newspapers. Mr Clarke's comments come in his foreword to a book, Understanding the Euro, to be published by the Federal Trust, a pro-European think-tank, on 29 October. It has been seen by The Independent.

He urges the Prime Minister to grasp the nettle while he enjoys a huge Commons majority by declaring Britain will join the single currency, either in 2002 or 2003. He says the Government should rethink its policy of putting off a referendum until after the next general election and consider holding one before then.

The call will not be welcomed by Mr Blair, who this week sought to embarrass Mr Hague by announcing that Mr Clarke was to act as London co-ordinator of a new British-Mexican business network. Criticising the Government's decision to rule out British membership before the next election, Mr Clarke says: "There is certainly no reason why we should now necessarily exclude the possibility of membership very early in the next century, most notably in January 2002, when euro notes and coins begin to circulate."

He fears that Labour's policy represents "not the confident assertion of a popular government with a large majority, and at least four and a half years ahead of it, but the voice of a strangely intimidated government afraid to use its position of strength in the national interest.

"It is difficult to escape the the view that, in its handling of the EMU issue at a critical time, the Blair government suffered something of a failure of nerve, and one which may have serious long-term consequences."

The longer Britain stays outside the single currency, to be launched by 11 EU countries in January, the harder it may to get in, Mr Clarke warns. Sterling could be "like a ping-pong ball between two footballs" - the euro and the dollar - leading to the pound moving around even more spectacularly than it has since 1992.

Mr Clarke reflects growing fears among pro-European politicians, including Paddy Ashdown, that Britain may miss the euro boat because of Mr Blair's caution. By deciding to "hack EMU into the long grass," he says the Government "has chosen to tie its own hands, mainly through fear of the media reaction to any early commitment to join".

Mr Blair is hoping that industry's preparations for the euro will develop an unstoppable momentum. "Instead of leading opinion, the Government hopes to be able to follow it, minimising political risks to its popularity and prospects of re-election," Mr Clarke says.

But he warns that public opinion is unlikely to shift decisively in favour of the single currency "unless the Government is prepared to take risks and put some of its still considerable political capital on the line".

Mr Clarke says there are "legitimate reasons to doubt" Mr Blair will risk a referendum in the next Parliament, when the domestic economy may be doing less well, there could be a smaller pro-EMU majority in the Commons and his government may be unpopular.

He says Britain will enjoy more influence in the EU if the Government shows it is serious about joining the euro. "It should announce sooner rather than later that, assuming the economics work out as we expect, Britain intends to join EMU early in the next decade,either in 2002 or 2003."