Europe unworried by UK delay

Germany said it understood Gordon Brown's decision

European leaders have been reacting calmly to the UK's decision to say "Not yet" to the single currency.

The European Commission said it was following the UK debate "with interest" while Vice-President Neil Kinnock said the UK Chancellor's policy was "practical and sensible".

Gordon Brown told the British parliament that only one of his five tests for euro membership had so far been passed, but he suggested that the UK could and should join up in future.

The UK's five tests

Convergence with eurozone

Enough flexibility to adapt

Impact on jobs

Impact on financial services

Impact on foreign investment

Read BBC reports from around Europe on the euro decision

He said the situation would be reviewed at the time of the next budget, and that a referendum could take place before the end of 2004.

Among the 15 member countries of the European Union, only Sweden, Denmark and the United Kingdom remain outside the single currency, and Sweden is due to hold a referendum on joining later this year.

In its statement, the European Commission said that it would continue "to pursue further integration within the euro area" despite the UK decision.

Mr Kinnock said the reaction from his fellow commissioners would be positive because "there is wide recognition of the realities that are at the centre of the British Government's analysis."

Next year?

The Greek Finance Minister, whose country currently holds the EU's rotating presidency, said he was confident that the UK would "do its best" to join the euro area when economic conditions allowed.

BRITAIN AND THE EU

1973: Britain joins the EU

1980: Margaret Thatcher gets rebate from EU

1992 (February): John Major negotiates opt-out from euro

1992 (September): UK pulls out of Exchange Rate Mechanism

1997: Gordon Brown says UK will not join euro before next election

2002: Euro notes and coins introduced in 12 EU nations

2003: Gordon Brown says UK not yet ready for euro

This would be beneficial to the UK and the euro area as a whole, he added.

The German Finance Ministry said it fully understood the UK's decision, but also said it hoped the UK would hold a referendum next year.

"We welcome the British Government creating clarity about the subsequent steps," the finance ministry said in a statement.

"We hope that the reforms the British Government are planning will make a contribution so that the economic tests for a euro entry are positive next year."

No surprise

The BBC's Tim Franks in Brussels says there is no surprise in Europe that the UK has decided not to hold a referendum for now.

What matters is that the UK will probably join - it is a future euro country

Johnny Munkhammar, Confederation of Swedish Enterprise

Full report from Sweden

He says the decision is seen in the context of the UK's long history of diffidence about European integration.

At the same time, he says, some euroland diplomats believe that now Britain's voice will be listened to less on a whole range of European matters - the most important at the moment being the drawing-up of a new constitution for the EU.

In Sweden the UK's decision is expected to give a boost to those campaigning against joining the euro in a referendum to be held in September.

One campaigner told the BBC that it undermined the argument of those in the Yes camp that Sweden would be isolated outside the euro.

However, a spokesman for the Confederation of Swedish enterprise said what mattered was that the British Government would probably join in future.

Irish disappointment

One disappointed European reaction to the UK decision came from the chairman of the British-Irish Interparliamentary body, Brendan Smith.

TONY BLAIR'S CALL LIST

President Chirac of France

French PM Jean-Pierre Raffarin

Greek PM Costas Simitis

Irish PM Bertie Ahern

Japanese PM Junichiro Koizumi

Spanish PM Jose Maria Aznar

Swedish PM Goran Persson

He said that businesses trading across the border between Ireland and Northern Ireland faced increased bureaucracy and administration costs because of the difference in currencies.

"It makes economic sense for all businesses on this island to ensure that we develop into a single currency zone as quickly as possible," he said.

UK Prime Minister Tony Blair was reported to be telephoning nine world leaders in order to explain the euro decision.

They included the French President Jacques Chirac and the prime ministers of France, Greece, Ireland, Japan, Spain and Sweden.

He was said to be telling the leaders that the UK was moving towards euro membership - but that it could take time.