Lord Owen: "A single currency is not something Britain needs"

Lord Owen, who served as foreign secretary under Jim Callaghan in the late 1970s, says the countries signing up to a single currency will eventually become a single state.

He told BBC Radio 5 Live that there were strong economic reasons why the UK should preserve sterling.

Lord Owen said: "People aren't stupid, they know when they are being sold a pig in a poke and I think one of the reasons that they are still very strongly against the euro is that they know there is more on offer. Effectively this is a big step towards greater integration."

'Threat to foreign policy'

He said: "They hear also there is pressure to give up foreign policy, which is also independently arrived at and they see there is an argument by many Europeans for having weighted voting whereby we could be overruled on foreign and security policy. They don't like that either."

Lord Owen: "We are heading towards a single state"

German minister for Europe Gunther Verheugen says the new currency will lead to greater tax harmonisation and closer economic union.

To that, Lord Owen responds: "Euroland will develop most of the characteristics of a single state because they will have to harmonise economic policies.

"It will be much more comprehensive than people think...even down to welfare and benefits."

'Economic strain'

Lord Owen, who left the Labour Party in 1981 to set up the now-defunct Social Democrats, said there would be "considerable economic strain" within the monetary union as individual countries were unable to set interest rates to cope with their own economic conditions.

He said anti-euro campaigners should not wait for a referendum and added: "Governments don't call referendums unless they think they can win."

Lord Owen said: "If there is a considerable body of opinion which continues to show that Britain can self-confidently remain outside the single currency but committed to the European Union then no government will call a referendum."