Mr Kenneth Clarke believes that Britain will have joined monetary union in less than five years. The amiable former Chancellor of the Exchequer maintains that New Labour's insistence on holding a referendum on participation in EMU after the next election has more to do with media management than with thoughts of national or European politics. "Gordon Brown will have to revisit the timetable," he predicts.

Mr Clarke, who lost the Tory leadership contest to the eurosceptic Mr William Hague this summer, has been on a continuous crusade promoting the single currency since he returned to the ranks of the backbenchers. Along with other ardent europhiles like Mr Michael Heseltine he opted out of the shadow cabinet on the basis that he preferred to work without the restrictions that that would impose.

Nevertheless, he dismisses any suggestion that he may be disloyal. Mr Hague, he says, has said there will be a free vote on the single currency and thus he is free to promote any point of view he likes.

According to Mr Clark, the current Chancellor, Mr Gordon Brown, has left himself a let out in terms of the timing of the referendum. "I suspect he means if an opinion poll shows there is an enormous majority in favour, a referendum will be called."

Mr Clarke also warns that sterling will fluctuate after monetary union when it is pulled in opposite directions by two very powerful currency blocks, the euro and the dollar.

While he refuses to give advice to a foreign government, he says that sterling would probably like to enter the euro zone at DM2.50 to DM2.60. This implies that a revaluation of the pound could leave it overvalued against sterling and hurt the competitiveness of the Irish economy.

"A rate around DM2.50 or DM2.60 would be more comfortable. However, the British economy will slow down in 1998 and 1999 so it is possible the exchange rate will go down and could go down quite sharply," he warns.

On the possibility of an Irish revaluation he says it is obviously a serious problem but his guess is other EU members-states regard it as an Irish problem. "I would be very surprised if the Irish Government had difficulty in persuading the others of a sensible entry rate, but it is quite a tricky situation."

Mr Clarke is vocal in his criticisms of the way economic policy is being conducted in Britain. He contends that the Bank of England should not have been given any degree of independence until it had shown some form of track record. Its record in predicting inflation is poor, he notes.

He is worried that the Bank of England is now in thrall to the financial markets and that it will not stop raising interest rates until there is a sign that the economy is actually stopping. That may be too late, he warns, and there is a danger that Britain will celebrate the new millennium in a mild recession.

"There is a danger that the Bank of England is going in for a degree of overkill and has raised interest rates too far." He is particularly critical of the latest rise.

Mr Clarke stresses the importance of the Bank of England and the Treasury trying to ensure a "soft landing" which would allow the economies of Europe and Britain to converge - and not pass each other by in opposite directions.

The former chancellor also has advice for his own party against a background of differences which have emerged between the Tories and the business sector over the single currency.

It is absurd, he says, for the Conservatives to be waging war on the business community. He insists that the vast majority of business people are in favour of monetary union and that the 74 per cent of Confederation of British Industry members who declared themselves earlier this week would be representative.

The Chamber of Commerce is also in favour and only the Institute of Directors is against. Even the list of so-called captains of industry who voiced their opposition in the British press this week are easily dismissed by him.

"There was not a surprise among them, some are former advisers to Margaret Thatcher and so on," he says.

Hardly surprisingly, the French also come in for some criticism from Mr Clarke. He is worried that the latest moves by France to try to promote its own candidate, Mr Jean Claude Trichet, as the new European Central Bank governor could reopen battles over political accountability and the actual degree of central bank independence.

Mr Clarke is also remarkably candid about the difficulties he faced coming up to the last election. Conspiracy theories abounded, he says. And he was constantly defending his position even on the most trivial of matters like the legal changes necessary for the introduction of monetary union.

In addition, cabinet meetings coming up to and during the election were dominated by Europe and not by the recovery in the economy generally.

He predicts that if the next election is also fought on the euro then it will probably result in the same parliamentary arithmetic with another overwhelming Labour majority.

He warns of the danger which some of the more fanatical Tory eurosceptics pose. Without naming names he says some would like to leave the EU altogether and merely be involved on an "association" basis in a free trade area. That, he says, could be catastrophic for Britain's interests.

The British want a proper debate on the issue, Mr Clarke says. While most want the option to opt-out, they sense the project will be in the national interest. In addition, he insists, the single currency in no way threatens national stability. It is, he says, "doomed to work".

Mr Clarke is candid in his judgment of the last three leaders of the Conservative party. Mrs Margaret Thatcher, he says, was very robust and firm. She was a good prime minister to work with "if you could stand the racket". However, she should have stood down after 10 years.

Mr John Major, in contrast, was more collegiate and never had her authority because of his very thin majority in the Commons. His priority was always party management and his mistake was to concentrate on the single currency as an election issue.

The only opinion he will venture on the present Tory leader, Mr Hague, is that he is young and bright. However, Mr Clarke notes that the last two fell over Europe - raising the question of whether Mr Hague could survive divisions caused by the same issue.

Mr Clarke appears not to miss the corridors of power too much. He says he will run in the next election. In the meantime, he is on the board of a large securities house and of Unichem as well as being deputy chairman designate of BAT.