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Robert Peston: Note of confusion on single currency
TUESDAY OCTOBER 21 1997Even the most Eurosceptic member of Tony Blair's cabinet believes it would be madness not to prepare for sterling's possible entry into a European single currency in 2002.
Although they disagree on how firm a commitment the government should make to joining by that date, all are agreed that the option should remain firmly open.
There is therefore bemusement at the highest level of government that briefings over the weekend by officials working for Gordon Brown - the chancellor and long seen as a proponent of Emu - have gone some way to closing off that option.
An impression has been created that the government will soon make a statement ruling out membership before the next general election, due by mid-2002 at the latest. The effect of that impression - if it is not reversed - will be to deter businesses from preparing for Emu and to stifle any attempts to launch a national debate on its merits. So even if the UK retained a theoretical option of joining the single currency in 2002, it might - in practice - not be ready for it by then, or even much later.
In other words, there has seemingly been a big change in government policy on one of the most important economic questions faced by any British government in the past 50 years. But, amazingly, no declaration to this effect has been made by the chancellor or the prime minister.
Mr Brown has made two statements on the issue over the past few days. He gave a series of relatively unsurprising quotes to The Times newspaper on Saturday that it was unlikely sterling would join Emu at the 1999 launch. Yesterday morning he made a short speech covering much of the same ground to the Stock Exchange at the debut of its new trading system.
But his media and economic advisers, in briefings to journalists, made clear that his anodyne words carried a weighty implication. Mr Brown referred to the need for "a period of stability without continuing speculation", during which the UK would attempt to meet a series of economic conditions he deems necessary for Emu membership. This "period of stability", they said, had been fixed as the lifetime of the present parliament. Officials also confirmed that Mr Brown would make a detailed statement to parliament on Emu within the next few weeks.
Big UK companies have taken note. Ministers said yesterday they had been in touch with several, trying to reassure them - more or less successfully - that the government had not suddenly become hostile to Emu.
Perhaps the most damaging aspect of the whole affair is the disclosure that Mr Brown authorised the briefing of The Times largely because of his concern about reports that he was at odds with the prime minister over Emu policy. Mr Brown is said by a senior minister to have informed Mr Blair that it was crucial such speculation end.
The prime minister is also said to have been surprised at the contents of The Times's story. Mr Blair, who has long harboured doubts over Emu deeper than those of Mr Brown, does not apparently wish to close the door completely on single currency membership during the life of this parliament.
But with speculation rife of a split between Mr Blair and Mr Brown, the prime minister's own spokesman had no option but to back Mr Brown's Emu line.
As a senior minister said, there is nothing more damaging than the appearance of division between a prime minister and his chancellor. Almost any price was worth paying to prevent that.
© Copyright the Financial Times Limited 1997
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