Treasury's 1970 'euro' warning

Sir Edward insisted on secrecy around negotiations

The Treasury warned on the eve of negotiations for Britain's entry to Europe that a single currency would spell the end of the UK's "economic sovereignty".

Secret files released to the Public Record Office under the 30-year rule show the government was told plans by the Common Market for economic and monetary union (EMU) could lead to a "European federal state."

A Treasury briefing paper for ministers drawn up at the end of 1970 said that Britain could be left with less control over its own affairs than the states in America.

The economies of the members of the EMU would be as interlocked as those of the states of the USA

Treasury

The disclosure is likely to give a sense of vindication to Conservative euro-sceptics who have long claimed that the British public was never told of the full implications of joining Europe.

The paper was written as Sir Edward Heath, the then UK prime minister, was locked in protracted negotiations for British entry.

It said the EMU proposals would have "revolutionary long-term implications."

"It could imply the ultimate creation of a European federal state, with a single currency," it said.

Mr Pompidou and Sir Edward Heath were holding secret talks

"With no exchange control, uniform rates of tax on goods and companies, a unified currency and the strong central direction of individual budgets, the economies of the members of the EMU would be as interlocked as those of the states of the USA."

The paper concludes: "The degree of freedom which would then be vested in national governments might indeed be somewhat less than the autonomy enjoyed by the constituent states of the USA."

The files also reveal the secrecy surrounding the negotiations.

At one point even the Foreign Office (FCO) was kept out of the loop.

The British ambassador in Paris, Christopher Soames, was a crucial player.

Secrecy

He set up the meeting between Sir Edward and French President Georges Pompidou which led to the crucial breakthrough in the negotiations.

He was technically answerable to the Foreign Office but he wrote to Sir Edward's private secretary Robert Armstrong offering to arrange for Mr Pompidou's chief aide to come secretly to London to prepare the ground for their talks.

"For the time being this letter is strictly for yourself.

"I am not sending a copy to anyone at the FCO," he wrote.

"I hope the Prime Minister will share my feeling that, if he wishes this idea to be pursued, the Foreign Secretary (Sir Alec Douglas-Home) should be aware of it."