Don't presume an early euro poll would be a defeat for the Chancellor

Tony Blair may look weaker if the referendum is not called; Gordon Brown will not look weaker if it is

It's common to see the great power struggles in politics as a zero sum game. Someone has to win, someone has to lose. And that's one way of looking at the forthcoming decision by Gordon Brown and Tony Blair on whether Britain should join the European single currency. But it's the wrong one.

The case for saying that Tony Blair has what a close associate calls a "settled desire" to enter the euro in this Parliament is now pretty incontrovertible. You can find the odd anti-single currency friend who insists that Mr Blair is still masterfully stringing along his European counterparts and British pro-Europeans by merely appearing to want Britain in before the next election. But the overwhelming balance of opinion among those closest to him is that he is deadly serious about it.

At least part of this desire is a straightforwardly political view of the British national interest. In a recent article in the Financial Times, Peter Mandelson eloquently enumerated several of the most momentous decisions confronting Europe in the next three years. Mr Mandelson's article referred to two past moments when Britain had delayed participation, first in the European Coal and Steel Community and later in the Common Market itself, with the result that its power to shape those institutions from within and from the start were severely diminished.

He added in an echo of Oscar Wilde: "To be caught out once is careless; to be left out twice is unfortunate; to opt out for a third time could be a disaster." Mr Mandelson's sub-text was that further delay in a decision on the euro would be a grave setback to Britain's chance to shape the evolving Europe in its own interests. And the former Northern Ireland secretary would not have written thus on such a momentous subject without reflecting the views of his friend the Prime Minister.

Although Mr Mandelson did not say so, the Valery Giscard D'Estaing convention on the future constitution of Europe is a particularly interesting challenge in the way in which it intertwines with the issue of British EMU entry, On one level, it could help the case for British euro entry when it reports next year, if it succeeds in giving more power to the elected leaders of the European Council at the expense of the Commission; if it produces a clear and sensible definition of what needs to be done by the EU and what should be left to member states; and, above all, if it signals that the famous European train has at last reached its final destination, and that the days of "ever closer union" are no more.

On another, it could be highly hazardous by producing "more Europe" rather than merely "better Europe". It isn't surprising, for example, that pro-euro British ministers are clamouring to be best friends with Klaus Hansch, a senior German MEP who chairs the ominously titled Economic Governance Sub-Committee of the Convention. For if anyone has the authority to accept or reject the kind of proposals for tax harmonisation that would excite a furious outcry in the UK, it's Mr Hansch.

But that's just the point. One reading in London of Mr Hansch's intentions is that he does indeed want to be helpful to British entry and does not want to frighten the anti-EMU horses with a tax harmonisation package. But how long would this benign approach last? And could it survive the mine-strewn no man's land between the Convention and Inter-governmental conference in 2004 if Britain had once again abandoned plans to hold a referendum? When the European finance ministers decided earlier this year not to rebuke Germany for breaching the fiscal stability pact, Sir Nigel Scheinwald, the UK Permanent Representative to the EU, minuted London with the warning that this was an ominous precedent, in which eurozone ministers reached an important decision without British input. On this occasion the decision had the warm support of the British Chancellor who is rightly exasperated by the wholly unrealistic rigidities of the pact. The next time – and there could be a lot of next times if Britain stayed out of the euro – it might not.

This is merely one illustration of the costs – ranging from reduced influence on the decision-making process to a fall in inward investment – which several of the more ardently pro-euro ministers fear lie in further delay. But one of those costs would be to the Prime Minister himself. Because he has let it be known that this is what he wants, it could not fail to be a setback for him in Europe and at home if he doesn't get it. However convincing the economic assessment, however ringing the declarations that Britain was "nearly there", an inevitable sense of disappointment would hang over the PM.

What's interesting about this is that the reverse isn't true. Tony Blair may look weaker if the referendum is not called; Gordon Brown will not look weaker if it is. Indeed, Mr Brown's scepticism now is potentially the greatest asset then. Precisely because his "pro-euro caution" is so well known, he becomes all the more persuasive if and when he finally pronounces that the tests have been passed. While setting high hurdles, his Mansion House speech in June was a study in armed neutrality. The very fact that Mr Brown has an effective veto on if and when a referendum is called means he is a victor whatever the outcome.

This isn't about personal ambition, except in the largest and most honourable sense. Yes, Tony Blair wants his place in history by taking Britain in. But he only gets that place in history if it works, as he believes it will. Gordon Brown, who wants to be Prime Minister, is more cautious. But if he is cautious about what EMU entry means for his legacy, he is cautious in the national interest. If EMU goes wrong it goes wrong for the country every bit as much as for him as a potential leader.

Which is why the five famous economic tests do matter. Indeed in an important sense they are all that matter. Yes there are other variables, like the prospect of war in Iraq. But the politics look more favourable than they did. True the latest polls show a fall in British support for the euro since January, but that is almost certainly because they peaked at the height of media interest at the time of the euro launch. As a bridgehead of opposition the Tory party looks weaker than ever. Even a relatively narrow majority may not be the disaster it was once thought to be; it could precipitate a possibly fatal Tory split, as the hard-line Eurosceptics were encouraged to fight for a reversal of the decision.

Which is why Mr Brown is right to focus on the national economic interest. Maybe he will, as some in the Blair circle think, finally come round to the case for entry. But he broods with good reason – and perhaps will do so with even better reason after the German elections – about the slow pace of economic growth in the EU. He is restless in his search for evidence that euro-entry will be in Britain's long-term economic interests. Just don't run away with the idea that it will be any kind of a defeat for the Chancellor if the referendum is called next October.

d.macintyre@independent.co.uk