Rory Cellan-Jones: Brown hastening plans to enter single currency

He will tell the Confederation of British Industry's annual conference in Birmingham, that he intends to publish a step-by-step plan to the euro to coincide with the launch of the first wave in January.

The initiative will be seen as a "change of gear" in the government's pace of preparations for signing up to economic and monetary union early in the new millennium.

In his address, he says: "This government has decisively and unambiguously put this country on a new road of constructive engagement. For the first time we are committed in principle to EMU.

The Financial Times Industry Editor Kevin Brown tells Richard Dallyn what the business community wants from Gordon Brown

"We have committed our country to full preparations that will allow us to make a decision, subject to a referendum, early in the next Parliament.

"Our strategy is to prepare and then decide."

The next stage would be the publication in January of an "outline national changeover plan" setting out the practical steps that need to be taken if Britain was to join the euro.

Tempting to Tories

The formation of the cross-party group will be seen as an attempt to re-open Tory Party divisions on Europe.

While the leadership is likely to be resolutely hostile, it may prove tempting to pro-Europeans like former Chancellor Kenneth Clarke.

"Strategy to prepare then decide"

Mr Brown will also use his speech to signal the government's deep unease at the direction taken by EU leaders at last month's summit in Austria when they backed Franco-German proposals for more spending to head off recession.

He said member states must push ahead with labour market, capital market and product market reforms to ensure "more competition, more flexibility, more investment and more employment".

On the domestic economy, the chancellor plans to repeat his insistence that the government can meet its £40bn spending plans for schools and hospitals despite having to sharply revise its growth forecasts downwards.

In his pre-Budget statement on Tuesday, he is expected to announce a revised growth forecast for next year of around 1% compared to the 1.75 to 2.25% predicted at the time of the last Budget in March.

'I know your worries

He will also defend the government's economic strategy in the face of complaints by industry and unions that high interest rates and a strong pound have made British exports uncompetitive.

The value of sterling has already fallen back 10% from its peak earlier this year, he will point out.

"I know about your worries about the pound. I have heard them.

"I think that the greater worry would have been to take the wrong action and return our economy to the severity of boom and bust when interest rates were at 15%.