Our approach on Britain's membership of the European single currency is considered and cautious: one of pro-euro realism

Gordon Brown

Mr Brown said: "To short-cut or fudge the assessment of the five tests...and to join in the wrong way or on the wrong basis without rigorously ensuring the tests are met, would not be in Britain's economic interest."

The chancellor has said he will deliver his verdict on whether the tests have been met by mid-2003.

'Realism'

If he says the tests - which include the potential impact on jobs and investment - have been met, the government would consider calling a referendum on whether to join the euro.

Mr Brown said the government remained of the view that "in principle membership of the euro can bring benefits for Britain".

He said: "Our approach on Britain's membership of the European single currency is -- and will continue to be -- considered and cautious: one of pro-euro realism."

The comments were welcomed by George Eustice, director of The No Campaign against UK entry to the single currency.

Benefits

He said: "This is a further sign that the Treasury is moving against the idea of joining the euro in this parliament."

Mr Brown also proposed an inquiry into the potential benefits of breaking down trade barriers between the European Union and the United States.

He said there could be huge benefits from removing tariffs and other barriers to the free exchange of goods and services.

And he called for a new "transatlantic alliance for prosperity" between Europe and America.

He said studies suggested that removing bilateral tariffs and non-tariff barriers in goods and services could cut EU prices and raise employment.

Mr Brown said US tariffs on steel imports were "unjustifiable" but should not become "sad symbols of a frayed transatlantic trade relationship".