Ray Egan stages a protest outside Parliament in a campaign to keep the pound in London. (AFP)

London, April 16 (Reuters): Speculation about Britain’s euro decision has hit fever pitch as the war in Iraq fades, with some reports ruling out a referendum on joining the single currency for years and others predicting a vote in 2004.

Either way, the debate that has raged since Prime Minister Tony Blair’s government adopted a wait-and-see policy way back in 1997, now has a short shelf life.

Chancellor of the exchequer Gordon Brown has pledged to deliver his assessment of the economic case for euro entry by the first week of June but is expected to do so in May.

The euro debate knocked Iraq off some front pages today as The Guardian claimed Brown had persuaded the pro-euro Blair to all but rule out a euro referendum before the next election, due by 2006. The report comes hard on the heels of an intervention by former Cabinet minister Peter Mandelson, who said on Sunday that Blair’s instinct was to go for a referendum in this parliament but probably next year rather than this.

Mandelson remains a close ally and confidant of Blair.

A closer reading of the Guardian story shows it does not jar with Mandelson’s analysis quite as sharply as first appears.

The paper said a euro statement, which aides say is still being thrashed out by Blair and Brown, will leave “a loophole that ministers might change their minds in exceptional economic circumstances or if Europe increases the pace of reform”. Blair and Brown have urged the EU to adopt low-regulation, British-style policies to boost growth and job creation.

Officially, the government would not be drawn on the report. “We are not going to give a running commentary on speculative newspaper stories,” a treasury spokesman said. “Government policy remains unchanged. We will publish our assessment by the first week of June.” But a government source said: “As far as I understand, these details are still under discussion.”

The UK economy is set to grow twice as fast as that of the euro-zone this year. Economists say that will make it difficult for Brown to report the clear convergence he has always said is necessary to recommend switching currencies.

But speculation has suggested he could deliver a “not yet” verdict, retaining his economic credibility but leaving room to revisit the issue next year, at Blair’s insistence. Blair has promised the public a vote if he decides to ditch the pound.

Pro-euro campaigners are hoping Blair will be emboldened by a swing in public opinion, which was overwhelmingly against war in Iraq before the shooting started but now supports the campaign to oust Saddam Hussein by almost two-to-one. Opinion polls show a similar ratio of Britons would prefer to have pounds rather than euros in their pockets.

With the end-game approaching, both sides of the euro debate are jockeying for position.

Some 93 pro-euro MPs, most from Blair’s Labour Party, have signed a parliamentary motion urging him to hold a referendum before the next election.

“I believe he considers Britain will miss out economically, primarily, but also politically if we remain outside the euro indefinitely,” Mandelson said. “I think his instinct will be to go for a referendum in this parliament.”