The European Commission president, Mr Romano Prodi, has said the strength of sterling will increase pressure for British entry to the euro.
In an interview yesterday, he said Britain will find it difficult to stay out of a successful European single currency. He forecast that in the near term the euro could be as strong as the US dollar.
"In my opinion, some day it will be convenient. Let's say if the euro will deliver, as I think, it would be difficult to stay out. A lot will depend on the fluctuation of the pound." The sale of carmaker Rover, which former owners BMW blamed partly on the strong British pound, showed UK export companies were under pressure because of the strength of sterling, Mr Prodi said.
His comments come at a time when the Conservative Party has been staging a "keep the pound" campaign, while the UK Trade Minister, Mr Stephen Byers, has been making comments in favour of UK membership of the single currency, urging his Labour government to start making the case for the euro and stressing the benefits of joining. The British Prime Minister, Mr Tony Blair, has so far adopted a wait-and-see approach, saying Britain should do so only if certain economic criteria were met and if the majority of people agree to the move in a referendum.
Conservative Party divisions over Europe burst back into the open at the weekend with former EU commissioner Mr Leon Brittan branding Mr William Hague's day of action for sterling a "mistake".
Lord Brittan, a former European Commission vice-president, accused the Euro-sceptics of spreading "scare stories" about moves towards European integration.
In a television debate he attacked former Conservative frontbencher Mr John Redwood for making "alarmist and untrue" claims on an EU conference later this year.
In the run up to the next general election, Mr Hague has made his policy of ruling out membership of the euro for the next Parliament central to his assault on Labour. Conservative workers manned "save sterling" stalls in hundreds of constituencies yesterday as Mr Hague promoted his national "day of action".
But in a sign of renewed Conservative tension over Europe - which for years dogged Mr John Major's administration - Lord Brittan warned the campaign threatened to open up old wounds. "I think it was a mistake to have a `Save the Pound Day' because it implies that that was the Conservative cause, whereas I think - why not `Save The NHS Day' or `Save The Schools Day?'
"And I think giving people that impression was damaging."
He told BBC's Breakfast With Frost: "I think from the electoral point of view that highlighting that issue to the exclusion of what you might call the bread and butter ones, highlights the divisions in the Conservative Party just at the moment when, on other issues, the Conservative Party is making headway and can seem united."
He warned the party leadership: "There are a lot of people - some of whom have very senior Government positions - who simply don't go along with the line about not joining the single currency during the course of the next Parliament."
