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Thursday, 20 February, 2003, 12:08 GMT
'No euro poll this year' - Kinnock
Neil Kinnock
Mr Kinnock says poll could be in two years

A referendum on UK entry to the euro will not be held this year - and could be delayed until 2005, former Labour leader Neil Kinnock has said.

In an interview with BBC News Online, Mr Kinnock said he believed time was running out for a poll this year.

"There isn't enough time this year, but next year is a possibility," said the European Commissioner.

It makes sense for the government to make an objective calculation about the best circumstances for British entry

Neil Kinnock
And he added: "Because of the rhythm of elections every four years that has been established people think we have four year parliaments.

"We haven't, we have got five year parliaments. So it may be if there was a referendum in 2005, parliament would still have anything from one day to one year to run."

Chancellor Gordon Brown will rule by 7 June whether the UK has passed five economic tests on euro entry, including the effect on jobs and whether the British economy can converge with the eurozone.

A positive result will lead to a referendum.

But there have been suggestions that the poll will be delayed until next year.

Open in new window : At-a-glance
Euro basics: Your need-to-know guide

Mr Kinnock, who remains close to Tony Blair, said politics will play a big part in the decision as to when a referendum will be held.

"It makes sense for the government to make an objective calculation about the best circumstances for British entry, including the best (exchange) rate at which we go in," he said.

You don't have (a referendum) unless you think you are going to win it

Neil Kinnock
"I don't think you can just stick a calendar on that. I would like to think that there could be a referendum next year.

"Objectively, there are factors at work. One is certainly attitudes towards the euro.

"Second is the general standing and strength of the government for reasons nothing to with the euro, but just because referenda are judgements of governments at least as much as they are of issues.

"And the third factor is the general feeling of well being or ill being about the economy.

Clue

"Those things have got to come together because basically - and it is not at all cynical - you don't have (a referendum) unless you think you are going to win it. It just doesn't happen.

"I have never had a clue as to when it is most likely to be and the only answer I have given to when it is going to be has been when the government thinks it can win it."

And Mr Kinnock accepts that at the moment, there is little hope of winning a vote on the euro.

"People have got to be persuaded and it is very clear that as things stand at the moment in the opinion polls, there is certainly not a majority in favour of the euro," he said.

Mr Kinnock says UK entry to the euro will be made easier by proposals for "very radical reforms" to the controversial stability and growth pact - the rules eurozone countries must follow - being put before European finance ministers in March.

The Financial Times reported on Wednesday that the commission will this week announce that it will not force the UK to comply with the pact if it joins the euro.

The report also suggested that the commission will water down its insistence that the UK must rejoin the exchange rate mechanism before joining the currency.

It is reported to say that the UK should be given leeway because of its low debts.

And Mr Kinnock backed that view in his BBC News Online interview.

He said proposed reforms to the pact are not about "tearing it up and starting again", Mr Kinnock said, but "changes of interpretation to make the pact more workable".

Upswing

He said the proposals would allow countries more flexibility: "If there is a downturn you don't turn the screws in a way that is likely to increase the downturn.

If you have very narrow rules, people bump into them and a damn good argument takes place about the rules

Neil Kinnock
"And if there is an upswing, you don't slacken the screws in a way that is likely to turn it into an unsustainable boom."

He said the commission is further proposing "the continentalisation of the golden rule" - Gordon Brown's dictum that borrowing must be for investment and not for consumption.

And in addition to that, he said the commission wants to see the pact recognise that countries with low debt in relation to GDP - such as the UK - have more room to move than those with high debts.

It puts, he said, more "reasonability" in the pact, and makes it more enforceable.

Broader

"If you have very narrow rules, people bump into them and a damn good argument takes place about the rules.

"If you make the rules slightly broader and say there is more room for you to move in...then that makes the rule much more rational, much more enforceable

"It isn't a softening or a slackening of any kind, it's increasing the workability of a set of rules in a way that is necessary when you are dealing with 12, then 15, then 25 countries."

It is now important for EU member states to act "very rationally" by embracing the proposals to make the pact "more stability and growth orientated" and then by enforcing the rules, he said.

He said the UK should also be pressing, not only for the "golden rule" to be applied across the EU, but also to get minutes of European Central Bank (ECB) meetings published and to see the ECB following the same inflation target as the Bank of England.


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20 Feb 03 | Politics
21 Nov 02 | Politics
05 Dec 02 | Business
29 Jan 03 | Politics
29 Jan 03 | Politics

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