UK will not take shortcut to euro, says Gordon Brown

British Chancellor Gordon Brown yesterday poured cold water on expectations that the UK government was leaning towards holding a referendum on joining the European single currency during the current parliament.

In a speech last night to the Confederation of British Industry, the largest employer's group, the Chancellor of the Exchequer stressed that the five economic tests of whether euro membership was in Britain's interest would be genuine.

These must be met before Britain can sign up for the single currency. "To short-cut or fudge the assessment, and to join in the wrong way or on the wrong basis without rigorously ensuring the tests are met, would not be in the national economic interest," Mr Brown said.

This was a reiteration of the "prepare-and-decide" policy the government has maintained since 1997. But a Treasury paper released last night reinforced the chancellor's caution about the euro.

The paper sets out issues being covered in the Treasury, described as its "preliminary and technical" work on assessing the tests.

Another paper updated the progress made by the public sector and businesses in preparing for possible euro entry. The government has spent £23.5 million sterling (€38 million) in building in euro compatibility into computer systems and planning for a possible changeover, most of it at the Inland Revenue, Customs and Excise, and in the social security system. Mr Brown's speech can be partly attributed to a desire to reassert his authority at a time when the international crisis is depriving him and his department of media airtime, but it may trigger renewed speculation of a split between Mr Brown and Mr Blair.

Mr Brown is concerned that his tests for joining the euro are being devalued by briefing and nuance, and he is determined that the euro is not relegated to a purely political issue and that the Treasury remains guardian of the tests.