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Blair Hints At British
Euro Referendum by 2004

Tony Blair Sparks Speculation in the House
of Commons. Picture (Right): BBC News Online.

A referendum on Britain’s entry into the euro could be held by 2004 at the latest. Political analysts made the prediction after the British Prime Minister Tony Blair declared that a decision to join the single currency will be made “early in the next parliament,” if his government wins a second term.

Blair Sets Timescale

 His declaration was made during a heated Prime Minister’s Question Time exchange with Opposition leader William Hague on February 7^th 2001. Mr. Hague forced Tony Blair to elaborate upon his statement. In response he insisted: “Early in the next parliament, of course, means within two years.” The Prime Minister’s statement took everyone by surprise, particularly the Treasury and the Chancellor of the Exchequer Gordon Brown.

 Initially the Prime Minister had made similar comments to those of Robin Cook, the foreign secretary. Mr. Cook himself had argued that a decision would be made early in a returned New Labour government. Tony Blair quickly stressed that the timing of the euro referendum still depends on Gordon Brown’s assessment of his five economic tests. The Government has always insisted that Mr. Brown’s five tests must be met before allowing the electorate to vote on the issue.

Brown's Five Economic Tests

Mr. Brown, as part of these tests, would have to consider the state of the British economy at the time. His five tests also analyse whether Britain has met the economic convergence criteria stipulated by the Treaty on European Union – the Maastricht Treaty. Meanwhile, Tony Blair assured MPs that the Government has no intention of rushing the decision. It also prompted speculation of a spring general election in May.

Others suggested that the Prime Minister had made the unusually frank statement believing that he could now win any forthcoming referendum on the single currency. It was also in complete contrast to the attitude of Gordon Brown, who believes that the single currency debate could distract voters away from his successful economic policies, and other key Government issues, during the next general and local elections. However, William Hague is determined to “Keep the Pound,” by ensuring that the general election becomes a mini-referendum.

Sounding the Pound's "Death Knell?"

Mr. Hague accused Tony Blair of sounding the “death knell of the pound.” He added: “The British people now know that if they vote Labour they will be voting for a party committed to scrapping the pound within two years of taking office.” Mr. Hague argued that voters should vote Conservative to keep sterling. Yet not even the Conservatives rule out membership of the single currency. Conservative policy rules out the euro “for five years, or the lifetime of the next parliament.”

Mr. Hague has come under fire himself for this policy by Europhiles and Eurosceptics alike. Many within the anti-euro lobby would like him to pledge outright opposition by declaring an absolute “never to the euro.” The Conservatives remain divided on the issue. This was highlighted by former deputy prime minister Michael Heseltine’s much publicised uncertainty over whether he’d vote Tory in the general election.

He accuses William Hague of moving the Conservatives too far to the right. Mr. Heseltine has also accused Mr. Hague of inciting xenophobia by encouraging anti-European sentiment. Even so he has buried his grievances and has decided to continue supporting the Party. Yet many other sitting Conservative MPs intend to speak their mind, even if it goes against the Party’s official line. That doesn’t matter whether they are for or against the single currency.

The Conservative Threat

Conservatives are their own greatest threat to a revival of fortunes with even Tory Eurosceptics, particularly MPs, fighting amongst themselves over policy. If they wish to win power in the general election, which speculators feel is unlikely, they should be presenting a cohesive force against the Government’s own line instead.

Ian Watson warned Tory MPs against straying from the Conservative’s official policy on BBC On The Record today, 11^th March 2001. He said: “ Those candidates who are thinking of perhaps departing from official Conservative party language, it is not, shall we say, a career enhancing move.” William Hague therefore needs to consolidate support for his policy to avoid the 1997 general election catastrophe. John Major’s “wait and see” policy at that time, led many Conservative voters to support the Referendum Party and the United Kingdom Independence Party (UKIP).

Mr. Hague also needs to focus attention on Tony Blair’s weaknesses in government. With respect to the euro debate, he must focus his party’s energy on the Government’s support “in principle” for the single currency. At the same time the Prime Minister will try to avoid the issue. Gordon Brown feels that even for New Labour it could be a vote-losing issue.

Europhiles Seek Government Lead

Yet Robin Cook and the trade and industry secretary have always spoken more vociferously in favour of the single currency. Reflecting the views of most Europhiles, they believe that the Government should lead the pro-euro campaign now rather than leave it too late. Both Mr. Cook and Mr. Byers claim Britain will lose foreign investment unless Britain accepts membership of the euro. They also recently said that most large firms are investing in Britain, because of New Labour’s pledge to hold a referendum “early in the next parliament.”

Soon after Tony Blair’s announcement in the Commons, campaign director Dominic Cummings of Business For Sterling, fired a warning shot over the Prime Minster’s bow. He argued: “The battle will be harder than he thinks. In 1975, business was united in favour of joining the EEC – this time, big business is divided and small and medium sized business want to stay in the EU and keep the pound.” Mr. Cummings also suggested that if Mr. Blair faced a right-wing, anti-EU campaign focused on “on abstract issues of sovereignty rather than concrete issues like jobs, then he could win.”

A Hard Walk Down "Referendum Street"

Mr. Cummings said that the anti-euro campaign will be “moderate, pro-EU, focused on the issues that matter to the people, and which represents majority business opinion.” This was brought home by the BBC Panorama’s “Referendum Street,” which carried out a mock euro referendum. According to a recent ICM poll 71% of voters remain against membership of the euro. Yet many of the programme’s participants were eventually swayed by the Europhiles camp’s economic arguments over lost investment and mass redundancies.

Even so Stephen Byers has admitted that the Europhiles’ battle for the euro “will be a hard campaign.” The “road to the euro,” following a Government recommendation to join, could take up to 30 months revealed BBC News Online. The BBC has not considered the Maastricht Treaty’s requirements though.

The Treaty stipulates that a member state can join the euro after a successful two year period of membership and alignment of its national currency within the exchange rate mechanism (ERM). Britain was forced to leave ERM in September 1992. Speculators caused a devaluation of sterling and the lira. So clearly there’s still a long, long way to go before the euro debate is put to bed.

Graham Jarvis MA, 11^th March 2001

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