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To: John Madarasz who wrote (251)	4/8/2003 9:32:16 AM
From: maceng2	Read Replies (1) \| Respond to of 1417

Tony B and the Euro, Germany, France. Testing time for Blair as euro verdict looms By James Blitz Published: April 8 2003 5:00 \| Last Updated: April 8 2003 5:00 news.ft.com The main issue hanging over Gordon Brown as he prepares to deliver his Budget on Wednesday is how much he will be forced to further revise his forecasts for growth and borrowing. But another question hangs over this Budget: where will it leave the vexed matter of Britain and the euro? In recent months, debate about whether the government will recommend euro entry has been sidelined by the war on Iraq and the backbench Labour rebellion it triggered. But there is no getting away from the importance of the five tests on euro entry being conducted by the Treasury, the result of which the government has pledged to announce by June at the latest. As the prime minister has often said, the question of whether Britain joins the single currency is a matter with long-term implications for the economy and the country's place in Europe. His own ambition to take Britain into the euro has never been in doubt. But the chancellor has never disguised his scepticism, making this the most sensitive issue in the complex relationship between the occupants of Numbers 10 and 11 Downing Street. There has always been a technical possibility that the announcement on the five tests could come tomorrow. But it is easy to see why the prime minister would want to delay this decision until some time nearer June. If Mr Blair is still aiming for a firm Yes to euro entry, he needs as much time as possible to settle the rift with France and Germany over Iraq. While the split with Jacques Chirac remains sore, a Yes decision would carry little immediate credibility with MPs and voters. But if Mr Blair has reconciled himself to the other potential verdict - something along the lines of "Yes, but not yet" - he will also seek to delay that announcement until closer to June. Iraq has been the biggest political hurricane of Mr Blair's premiership and the war is not yet won. A "Yes but not yet" verdict would be seen as a blow to the prime minister, and this is not an announcement that Mr Blair will want while he is still recovering from a historic backbench rebellion and remains hostage to the fortunes of the battlefield. Conversely, it is easy to imagine why the chancellor might want to announce the verdict on euro entry in the Budget, assuming that it is a decision to delay entry for the foreseeable future. One reason is that the announcement would distract attention from any revision he makes to growth and borrowing forecasts. Another is that he would not want to announce the decision too near the June deadline. As one senior civil servant said recently: "Ministers, least of all chancellors, hate getting boxed in by timetables. You need to keep yourself a little space." Wednesday will give an idea of how the debate between the prime minister and the chancellor is playing out. But nothing can be taken for granted. The chancellor's deeply-held concerns about the state of the European economy are clearer than ever. But so too is the prime minister's determination to do what he believes to be "the right thing".