”Britain will not be voting to join the euro in this parliament. That’s a prediction rather than a statement of fact, but judging by last week’s Queen’s speech a reasonable one. Plans to put the issue to the public have not so much been put on the back burner as left smouldering on a pile of leaves somewhere at the bottom of the garden. So much for the idea that November would be euro D-Day, the moment Tony Blair decided to launch his big offensive,” writes Larry Elliott in today’s Guardian.

“Proposed legislation in the Queen’s speech was supposed to be the final stage of the government’s build-up. First, there was reconnaissance. Voters would travel to Europe in the summer and come back enthused about the euro. Come September, the government would wheel out its heavy guns for a bombardment of speeches designed to extol what Britain was missing by being on the outside. After a couple of months of softening up, the prime minister would finally send his troops over the top. Something, it seems, has gone wrong with the plan. What we saw last week was not the start of an offensive; more the sense that the government is quietly removing its tanks from the front line but has yet to work out how to put a positive spin on the strategic withdrawal.”

“Whitehall insiders say that Blair has not yet given up all hope of a vote next year, and the option has been left open. But it would require all of the following to happen – a robust recovery in the eurozone economy, the reform of the stability and growth pact, a downturn in the UK, the treasury concluding that Gordon Brown’s five economic tests have been passed and the expenditure of a great deal of government time and effort to win over a sceptical public. The likelihood of this happening is, to be frank, slim.”

“Does it matter if the referendum is put on ice? Not at all. The original argument, that Britain would suffer grievous economic damage by being outside the new currency, has rather lost its lustre as the design flaws in this ill thought-out experiment have started to become apparent. Even supporters of the project now accept that there may be one or two problems with a one-size-fits-all monetary policy backed up by a deflationary fiscal policy.”

“The new line of argument is, therefore, that Britain could do more to rectify these deficiencies by being on the inside than it can on the outside. This is a bit like saying that the best way for Abraham Lincoln to abolish slavery would have been to set up and run his own cotton plantations. Britain has far more influence on eurozone economic policy by doing the right things on the outside than it would have by doing the wrong things on the inside.”

“That certainly appears to be Gordon Brown’s view. The chancellor is also rightly concerned about the impact of monetary union on the stability of the UK economy. With house prices rising at 30%, it is hard to believe that Britain needs the easing of monetary policy which membership of the single currency would entail. The Bank of England is already warning of the risk of a property crash; joining the euro when Britain’s domestic demand is so much stronger than the eurozone’s would make it a certainty. It would also leave the government with only one method of cooling it down – tighter fiscal policy. Taxes are already going up in the spring, while higher public spending is the centrepiece of Labour’s domestic agenda. Somehow, it doesn’t quite feel right. Likewise, it would hardly help the eurozone – struggling as it is with low growth – to add the UK economy to the mix, since it would add to inflationary pressure and lead to higher interest rates.”