The Government, like the other parties, is pledged to hold a referendum on any decision to take Britain into a single currency. A government determined to win a second full term simply will not take the risk of a referendum campaign on such a tricky issue in the run-up period to the next General Election. Failure in such an enterprise could be the beginning of a downward spiral . Mr Blair and his colleagues do not want to alienate them before the election. In the meantime that leaves the Labour Government with a problem.
Ministers are already nervous that Britain has lost clout at European negotiating tables.
Mr Blair has been trying to counter this by engaging in other projects designed to burnish his government's pro-European credentials, such as the agreement with Spain to press for flexible labour markets and the agreement with France to give the European Union its own defence capability. A further problem for the Government is that the pound has been pushed to levels which make life uncomfortable for British manufacturers and exporters by financiers hedging against European uncertainties. And some Euro-sceptics within the Labour party warn of the dangers in joining a high unemployment zone policed by a European Central Bank with responsibility for inflation but not for output or employment. For the Tories, William Hague has proved an instinctive Euro-sceptic who now has a vested interest in the failure of the single currency. He won a convincing victory in an internal party referendum on his policy of keeping Britain out of the single currency for this parliament and the next, arguing that EMU had to be judged over at least the period of an economic cycle before such a decision could be taken.