Concern about the apparent lack of economic convergence within the eurozone is seen as a key factor.

Douglas McWilliams, chief executive of the Centre for Economics and Business Research, said for some years he had been working on the assumption that Britain would join the single currency in 2002, shortly after the next general election.

But he said the recent fall in the euro's value, while not a measure of the currency's success, had highlighted strains in the system and cast doubt on the performance of the eurozone economy.

Mr McWilliams said: "The increasing divergence of economic performance within the zone casts some doubt on a "one size fits all" monetary policy."

Sterling's strength

There is also the difficult issue of establishing the rate at which the pound would join the euro.

With the pound staying stubbornly strong and likely to do so, it may be difficult for Britain to join at much less than 1.50 euros, or 2.94DM in old money, Mr McWilliams said.

"Mr Blair is too shrewd a politician to fight a referendum on as crucial a topic as the euro unless he is a strong odds-on favourite to win.

"With public opinion hardening against the euro joining, we now think the probability of the UK joining in 2002 is down to 30% to 40%," he said.

The Labour government has promised to make a decision on joining the euro early in the next parliament subject to five economic tests and a referendum. An election is due by May 2002.