One of the great cliches of modern political discourse is that Gordon Brown is sceptical about the euro and Tony Blair is a great enthusiast. I am as guilty as any commentator in having repeatedly pointed to this tension.
We had plenty of evidence for it during the general election campaign, when Blair was remarkably voluble about the benefits of joining the single currency, while Brown held his peace.
And there were more signs of Blair’s preparations for the great euro campaign in the days after the election, when he recruited Stephen Wall, the former British ambassador in Brussels, to work with him in Downing Street. Wall would surely be preparing the ground for a euro referendum? Well, I am now convinced that his job will be different, and that he is more likely to spend his time placating other European governments over the UK’s reluctance to join the eurozone.
My reassessment was prompted when I learnt that it was Blair who asked Brown to give less enthusiastic support for monetary union in the Chancellor’s annual Mansion House address to the City. Downing Street reworked the draft of Brown’s speech to demolish any suggestion that the government was charging at breakneck speed into the euro. It was in no sense a Brownite coup, as some have suggested.
“The Prime Minister was concerned that the momentum for early entry was building, and he wanted to stop it,” said one of his advisers. “Brown was originally planning to say some very positive things about the euro. Most of those bits were taken out by Downing Street.”
So where will Blair and Brown actually end up, when the spin and counter-spin are replaced by deeds? My view on what will happen has completed a perfect circle since the autumn, when I first became convinced that the UK would not be joining the euro in the lifetime of this parliament. By the election, I was persuaded that the Prime Minister was gearing up for an early referendum. This may have been foolish of me, but I am told it reflected Blair’s plans at the time. Now I am back to where I started, believing that the UK will remain a refusenik at least until after the next election.
Here is why. First, Blair’s confidence in his ability to win a plebiscite has been shaken by the Irish vote against the Treaty of Nice. “It reinforced the arguments of those around him who believe that winning a euro referendum will be enormously difficult,” said a minister. “Blair is terrified that voters will not do what they are told.”
But more influential even than that is disenchantment with the European Central Bank. “It is far too secretive about how it decides whether to change interest rates,” said a member of government. “But worse still is the disreputable system for appointing the next president.”
The background is that, in May 1998, EU government leaders agreed that Wim Duisenberg would be appointed the bank’s first president, but would serve a truncated first term of about four years. To appease the French, an understanding was reached that, in 2002, he would be succeeded by Jean-Claude Trichet, the personable governor of the Bank of France. Although this was all concluded informally, with nothing written down, for fear of humiliating a Dutch government about to face a general election, the French insist that the deal was binding.
Now, there is a hitch. Trichet is being investigated – as a former finance ministry official – for possible complicity in the falsification of the accounts of Credit Lyonnais, the former state-controlled bank that came close to collapse. Unless the investigation is dropped soon, he will not succeed Duisenberg. The French insist that the 1998 gentleman’s agreement gives them the right to choose a stand-in for Trichet. This is hotly disputed in many European capitals and is difficult to prove. Besides, the French are not offering an alternative candidate of Trichet’s calibre.
The UK has an important role in arbitrating on all this, because Blair was in the chair when the unseemly arrangements were made. Notes of the meeting are being exhumed; memories of what was said are being probed. Not surprisingly, nobody at the Treasury or in Downing Street is becoming any more enthusiastic about joining the euro as they watch this spectacle.
The widespread view among them is that Blair and Brown will now move quite quickly to rule out UK membership until after the next election. The Treasury is already engaged in detailed preparations for the formal assessment of whether the UK meets the Chancellor’s five tests for euro membership. It is working on the assumption that, when it is asked to produce the assessment, it will have just two months to do so. “Obviously, we have to do much of the work now,” said a government member.
Officials also believe they will be told by Blair and Brown what conclusions they are supposed to produce on whether the tests are met. “My best guess is that the Treasury will be asked to show that we are making progress to meeting the tests, that we remain on course to join the euro, but that we will have to make a further assessment after the next election before we can be sure,” said one well-placed source.
When will this all happen? Sometime after Christmas, is the date I am being pushed towards. Early in the new year, Blair will deliver his euro “non” – or, more precisely, his “desole, mais pas encore“.
Robert Peston is the editorial director of Quest (www.csquest.com)
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