By Gavin Friend
LONDON (MktNews) - UK Chancellor of the Exchequer Gordon Brown is reported to have signaled this weekend that there will be no early push for UK membership of Economic and Monetary Union, according to the Sunday Times newspaper. While Brown is not quoted directly, the paper says Brown's aides reckon a UK euro referendum, "could be years away." It adds that rather than softening his line on the euro after the election, Brown "appears more determined than ever to put the deal on ice."
Brown recently hardened his scepticism of the single currency project by criticising the ECB's price-stability-only mandate and by querying the fact the bank does not publish minutes of its monthly interest rate setting meetings and hence is not very transparent.
The Sunday Times is joined by a host of other leading UK weekend newspapers in reporting that Brown urged Prime Minister Tony Blair to remove foreign secretary Robin Cook in Friday's cabinet reshuffle because of Cook's open advocacy of early UK entry into the single currency project.
Cook, seen as euro-sceptic when he entered the cabinet in 1997, is believed to have "gone native" on the euro, emerging as the cabinet's most ardent supporter of early UK entry.
According to the Observer newspaper, Cook was on the verge of doing a deal with former Trade and Industry Minister Stephen Byers (now moved to Department of Transport, local government and the Regions) to increase their pro-euro rhetoric and push for a referendum in autumn next year.
The Observer said that Tony Blair was so concerned that the cabinet would be split on Europe that he decided Cook and Byers should be moved. Cook was 'demoted' to Leader of the House of Commons and replaced by Jack Straw, the former Home Secretary.
Straw's appointment is seen as sending mixed messages over Blair's approach to the euro. The Guardian speculated whether this meant the prime minister was cooling on Europe.
Blair's official line on Europe is that if membership is seen in the nation's interest and backed by passing Gordon Brown's so-called five economic tests, then the government will recommend joining. The final decision will be made by the electorate in a referendum.
While Blair made a number of changes to his cabinet, bringing in six so-called 'Blairites' to balance up Brown's influence, the appointment of Straw clearly shows Blair wants to balance the cabinet with ministers who are not so gun-ho on Europe that any decision to stay out via a Brown recommendation that the economic tests are not met, or if a referendum were to deliver a 'no' vote, this would cause the least amount of embarrassment.
Straw campaigned against UK membership of the Common Market in 1975 and while he has made it know in the recent past that he has an open mind on Europe, he is also seen as a patriot.
The Sunday Times reported the Treasury as welcoming Straw's appointment, quoting a senior official there as saying, "It is hoped that the new foreign secretary will ensure the Foreign Office officials take a more pragmatic and less ideological approach to European policy matters and in particular the euro."
The paper said the euro was well down Brown's list of priorities and he was devoting his time to ensuring the delivery of better public services and lifting Britain's productivity. The paper said Treasury officials were not expecting to start assessment of whether the UK met Brown's five tests for entry yet.
Meanwhile, the Sunday Business said that an email from a Senior DTI official to a number of City economists asking for any recent research they have done on the rate at which the pound should be exchanged for euros "if that ever came to pass," suggested the assessment of the five economic tests had already begun.
The Sunday Times also ran an article entitled "Pound to plunge to $1.30 as euro speculation grows." The article quotes IDEA analysts as seeing a fall in cable to $1.30 and by 5% across-the-board. It also quotes the Treasury as describing last week's plunge in sterling as an "over-excited" market reaction.