UK Euro Vote A Fading Hope, Sweden Or No Sweden

By Gonzalo Vina
583 words
12 September 2003
14:50
Dow Jones International News
English
(Copyright (c) 2003, Dow Jones & Company, Inc.)

Of DOW JONES NEWSWIRES

LONDON -(Dow Jones)- Under ordinary circumstances, a rejection of the euro by the people of Sweden this Sunday would have dealt a big blow to those hoping Tony Blair's Labour government will take the U.K. into the single currency.

But Thursday's death of Swedish Foreign Minister Anna Lindh - who was stabbed while shopping for clothes Wednesday - means that these are anything but ordinary circumstances. So a Swedish "no" to Economic and Monetary Union isn't likely to have much impact on Blair's plans after all.

Even so, the hope that Blair would schedule a referendum on the euro during the life of this Parliament - which sits until 2006 - have dimmed considerably in recent months.

"It's unlikely. In fact, it's very unlikely," says Robert Barrie, chief U.K. economist at Credit Suisse First Boston in London, who himself is unsure whether the U.K. should sign up.

When the Labour government swept to power in 1997 it promised a change in attitude towards the European Union after the previous Conservative administration's thorny relations with its neighbors. It also promised to assess the economic case of adopting the euro after saying that it was in favor "in principle" of signing up to the project.

But the years have passed and after a negative economic assessment made in June, the U.K. remains outside the 12-nation currency block.

But even that wasn't enough to kill off the hopes of the most ardent supporters. After Chancellor of the Exchequer Gordon Brown gave membership the thumbs-down following the results of his five economic tests, the government promised it would take the issue to the people. It didn't.

And as a result, the chief cheerleader of the pro-euro cause in the U.K. decided to quit his post.

"When I came here I was told Tony Blair would attack anti-European prejudice," Simon Buckbey told the Guardian newspaper when he announced his resignation as director of pro-euro lobby group Britain in Europe Tuesday.

"One speech every six months does not make a campaign," Buckbey told the Guardian.

Perhaps Blair was put off by the immensity of his task. Public opinion on the euro hasn't budged in the last few years, notes Tim Evans, president of the Center for the New Europe, a Brussels think tank.

"British public opinion seems immovable on this issue. I have been watching the polls quite close for a number of years, and people seem resolutely opposed irrespective of their political creed," Evans says.

Things have gotten worse for the government recently, Evans says, with support among the center-left - recently the most enthusiastic advocates of closer integration with the European Union - starting to wane.

John Wyles, director of GPlus Europe, a Brussels-based communications consultancy, says the U.K.'s main problem with dropping sterling for the euro is that the pound is closely linked in the public mind with sovereignty.

And following Blair's sagging popularity - which is mostly because of fallout from the war in Iraq - the prime minister is going to be careful about embarking on political battles he may not be able to win.

"The real problem in the U.K. is that the authority of the prime minister has been damaged," says Wyles.

- By Gonzalo Vina, Dow Jones Newswires; 44 20 7842 9497; gonzalo.vina@dowjones.com