The euro train is leaving without a British reservation

The British Prime Minister is fond of train analogies. He once famously threatened that the Northern Ireland settlement train was leaving with or without all the parties aboard. Well, yesterday saw the train for the euro zone depart with the British government at the station, but without a reservation. Mr Blair is also fond of tough choices - or, at any rate, of talking about them. Reflecting on the next stage of the journey toward European political and economic union at his Seychelles retreat, Mr Blair knows the decision to join, or not to join, the single currency will be the toughest of his premiership. He knows, too - not least in light of recent events - that it is unlikely to grow easier over time. Moreover, given the strategic position adopted by the Conservative leader, Mr William Hague, it seems certain Mr Blair will have to come to a settled view on the issue within a shorter timescale than he had envisaged. For while the government has all but ruled out a referendum until after the next general election, Mr Hague's opposition to British membership for at least 10 years suggests this is the issue on which that election will be fought.

As the denizens of the Square Mile broke off their festivities - they at least are ready to do euro business - the debate about the likely implications for Britain showed signs of finally gathering some steam. Will staying out spell higher interest rates and unemployment for Britain, while the 11 founding members enjoy steady growth, see their companies more competitive and their consumers benefit from lower prices? Will the speculators do for sterling as they did on Black Wednesday? Or would the government heave a huge sigh of relief at a depreciation of sterling, rendering British manufacturing once more competitive? Might sterling's volatility hasten the relocation of US and Japanese investment? Or will high interest rates dictated by the European Central Bank bring Europe's fragile growth to a halt, and the whole EMU enterprise prove a deflationary disaster? These benign and malign scenarios obviously reflect the polarity of the debate between Britain's Europhiles and Eurosceptics. Nobody really knows what lies ahead. But the certainty is that we will know a good deal more before the people go to the polls sometime around May 2001. With initial uncertainties removed, and some two years' hard evidence, a much clearer sense of the economic consequence of Britain's non-membership should have emerged. We will also know by then if Mr Blair and the Chancellor, Mr Gordon Brown, have succeeded in confining the issue to an economic judgment - to be taken by reference to the Chancellor's stated criteria for the national interest - or whether Mr Hague has succeeded in defining it as a constitutional issue.

Recent poll findings confirm massive residual concern among British voters about the prospect of "the European superstate", and the loss of the pound as a symbol of sovereignty - although those who believe British entry "inevitable" (80 per cent in a Daily Telegraph poll) would appear to underline the wisdom of Mr Blair's "softly, softly" approach to conditioning public opinion and expectation. To those convinced of the Prime Minister's European commitment, the strategy has been perfectly clear - to have the euro established as a fact on the ground, and the inevitable decision to join a matter for good old British pragmatism. The "softly, softly" strategy has, however, been dealt two significant blows in recent weeks. The resignation of Mr Peter Mandelson will deny Mr Blair at cabinet the tactical and strategic skills of the man who was, without doubt, the government's most committed and consistent pro-European. And the arrival of Mr Oskar Lafontaine - for all the government's denials and dismissals of tax-harmonising "scare" stories - has illuminated the federalist vistas, and moved the British debate to the ground of Mr Hague's, rather than Mr Blair's, liking. Mr Hague has undoubtedly taken a huge gamble, committing himself and his party so definitively. But it was probably the only one possible. Like Mr Blair, the Tory leader has but one chance to call it right. And calling it as he has means the British people will have a real choice.