LONDON (MktNews) - Gordon Brown's closest aide has warned that an early referendum on EMU entry could split the Labour Party and risk Britain's economic stability, according to a report in the Independent newspaper.
The Independent has obtained a tape-recording of a speech made by Ed Balls, the Treasury's chief economic adviser, from a conference two weeks ago organised by Progress, a group aimed at fostering debate between the Government and the grass-roots of the Labour Party.
"We have to be careful in the second term that we maintain our position as Pro-European realists. We know there are big debates to be had on Europe, on taxation, on the euro, on economic reform, on political reform, Balls said.
He continued, "The most important thing for us as a party is to keep focused on the need to stay united, stick to a long-term agenda and not do anything in the short term which would divide us... and which would put (at risk) our ability in 2005 to show we have delivered on stability, on full employment and on public services."
The Independent quotes an ally of Mr Brown as saying "It was the clearest possible statement that we won't hold a euro referendum in this parliament."
Balls' comments reflect in part comments by Gordon Brown, made since the June 7 election, that the government's approach to EMU membership will be considered and cautious. In particular, that the economic circumstances are right for entry into the single currency (the Treasury's five economic tests). However, Balls' comments appear to go one step further by arguing that any decision on EMU membership could be swayed by political, not just economic reasons. The government has pledged to hold a referendum on EMU entry should the government decide that membership would be in the best economic interests of Britain.