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Last Updated: Wednesday, 26 November, 2003, 15:50 GMT
Q&A: What now in euro saga?
The government revealed its verdict on UK membership of the euro in June 2003. BBC News Online looks at what the next steps will be.

What's happened?

Chancellor Gordon Brown announced the government's decision on UK membership of the euro in June 2003.

As expected, he said the government believed the time was not right for Britain to join the currency.

He said four out of the five tests he set for UK membership of the euro in 1997 have not been met.

So the UK won't be joining the euro?

It's not as simple as that.

Mr Brown said he is in favour of joining the currency when it is in the UK's national interest.

Which is when?

When his five economic tests are met.

Mr Brown gave pro-euro campaigners hope, saying he would reveal in his next Budget early next year whether he would reassess the tests.

With the government also promising a referendum on UK membership of the euro, a "paving" bill was being published in November to put things in place for a referendum in the future.

That was seen by the pro-euro lobby as a "road map" for euro entry.

They had long given up on hopes of a poll this year.

Those on the other side of the argument say it's nothing of the kind, but is rather a "token statement".

They say the case for the euro has not been made - and will never be.

What is a "paving" bill?

As the name suggests, such a bill paves the way for a referendum. Essentially, it puts the necessary legislation in place in order to hold a referendum.

But the bill was only being published in November 2003. It may not be agreed until later.

So when could there be a referendum?

Many commentators at Westminster believe that Mr Brown's statement in June effectively closed the door on a referendum before the next general election.

But technically, his announcement does leave open the possibility of a referendum in 2004.

The chancellor's aides suggest that such a scenario remained a possibility, with autumn 2004 floated as a potential date.

But the following year seems more likely if a poll was to take place before the next general election.

The chancellor will say in his Budget in the spring of 2004 whether the tests are to be reassessed.

Assuming he decides to do so, that could take place by autumn 2004.

A positive verdict could lead to a referendum in spring 2005.

If that happened, and the UK people voted "yes" to the euro, the currency could be introduced 30 months later - in late 2007 or early 2008.

The Treasury has set out a new "changeover plan" to show how the euro could be adopted if voters backed the idea.

It says the euro would be introduced two-and-a-half years - 30 months - after a "yes" vote in a referendum.

It means that if as many suspect there won't be a poll before the next general election, UK entry to the euro could be as far away as 2010.

Was June's decision exactly as expected?

Pretty much.

Mr Brown did what everyone expected in ruling out a referendum this year.

But the distant possibility of a poll next year will be seen as the prime minister holding sway - just.

The government has insisted that the decision is being made on economic grounds.

But there is a huge amount of politics going on.

Mr Blair is said to want to leave open the possibility of a poll before the next general election - and that's what happened.

Many will doubt that this is realistic - and will argue that Mr Brown's favoured option, putting the issue on hold till after the election, has prevailed.

Both men will be watching the opinion polls on the euro to see if the current position - which suggests that the British people would reject euro entry - starts to change.

No politician wants to back the losing side, after all.

So while the economics can't be ignored, politics plays a massive part.

And it's why the government will step up its pro-Europe rhetoric - and try to paint its oppenents as narrow-minded xenophobes.

What does the opposition say?

That the whole process is a farce which has more to do with power plays than the national economic interest.

They say it's all about the battle between Mr Brown and Mr Blair.

The Tories insist they are pro-Europe - but against joining the euro in the immediate future.

The Liberal Democrats want to see more commitment to the euro from the government.

How did we get to this stage?

We are at the end of one long drawn out episode in the history of the government's euro policy - and at the beginning of a new stage.

When they won the last election, Tony Blair and Gordon Brown said a decision would be made on the euro within two years.

The decision is based on five economic tests which Labour set out on coming to power in 1997.

And what we got on Monday was a response to the commitment given two years ago.

The announcement came after three weeks of meetings and consultation with ministers.

What is the background?

When Labour took power in 1997, Chancellor Gordon Brown announced five tests which he said must be passed before he would recommend UK entry to the euro.

They examine the effect of joining the euro on jobs, on the financial services industry and on foreign investment.

They also look at whether the UK economy is in line with the eurozone and whether it has the flexibility to adopt if it isn't.

Mr Brown said only one - the impact on the financial services industry - had been met.

Who are the key players?

Mr Blair and Mr Brown.

The issue is being seen as a power struggle between the two most powerful men in government - the roots of which are seen as lying far deeper than the debate over the euro.

Indeed, they go back to an alleged agreement between the two men that Mr Blair would eventually stand aside as prime minister in favour of Mr Brown.

So how big a decision is this for Tony Blair in terms of his premiership?

It is the biggest single decision that Tony Blair faces, certainly in terms of the domestic and European agenda.

He has always sold himself as a fervent pro-European and joining the euro has become a litmus test for that.

That's why he immediately hit the phones after the announcement in the Commons to assure other EU leaders of his commitment to the euro.

He still hopes to secure his place in history by taking the UK into the euro.

And Gordon Brown's statement doesn't rule that out - but it will be a disappointment to many pro-euro campaigners.


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