Speaking at the Kensington & Chelsea Constituency Association, the Shadow Chancellor, Rt. Hon Michael Portillo:
"Tony Blair's controversial claim that Britain's self-interest lies in the UK scrapping the pound, being part of a single currency and a European Superstate, cannot go unchallenged.
"The moderate majority will disagree that it is patriotic to scrap Britain's currency and subject our economy to a single European interest rate, with possibly profound effects on British jobs.
"The Blair vision of Britain ceding more and more economic and political powers to un-elected officials in Europe, is a defeatist agenda. It highlights a profound lack of confidence in Britain. A lack of confidence in Britain's ability to be a successful economy outside the single currency. And a lack of confidence in our ability to govern ourselves and influence the world without ceding authority to a more closely integrated European Union.
Political Realities: Political Union and a Democratic Deficit
"The main motivation for the creation of Economic and Monetary Union is not economic but political. It is indisputable but it is still scarcely discussed in the UK.
"The political project is understood in that way and discussed in those terms by our European partners, but Tony Blair pretends that it is not the case. This is a deceit that does him and the country a disservice.
"You don't hear Mr Blair urging the single currency on us because it's necessary for political union. However, one of the published "Blair memos" revealed the Prime Minister's view. He said that: "The truth is that the politics is overwhelmingly in favour".
"Yet Mr Blair and Mr Brown still refuse to spell out just what the constitutional and political issues are that they have dismissed and will not discuss.
"Even at the this stage of the euro's evolution, within the eurozone decisions of critical political significance have moved outside democratic control.
"Decisions on interest rates - which are decisions about the rate of growth and unemployment and mortgages - are now taken in Frankfurt by the European Central Bank, which is not elected and not democratically accountable. Unlike the Bank of England, it is not accountable to a Chancellor of the Exchequer who sets its objectives, and who in turn is answerable to Parliament.
"Voters in Ireland who might wish to vote against the policy that has brought them high inflation cannot do so because the policy isn't made by their democratically elected government, but by the European Central Bank. Voters in Germany, frustrated that interest rates set at too high a level may interrupt their economic recovery, cannot vote against the policy either.
"Labour are too complacent about this democratic deficit. All the indications are that people are actually looking for democracy to be brought closer to them, not made more remote. From Scotland to Catalonia, Europeans have shown that they don't feel that even within the nation states they have enough in common to wish to be governed in common. They have established their own parliaments. The move to transfer power to centralised European institutions swims against the tide.
"Labour won't discuss the political and constitutional implications of EMU, though they acknowledge that such implications exist. Robin Cook said on Wednesday that joining the Euro "is not purely an economic judgment … there are political issues that have to be weighed in the balance. He was asked to set these issues out, but was unable to".
"Gordon Brown was this morning asked the same question. Again, he confirmed that there were economic issues because he said "we do not believe that the constitutional barriers are insuperable". But again he was unable - or unwilling - to set these issues out.
"Not only have Labour not shown how they have resolved the political and constitutional issues, but the electorate is not even allowed to know what, in the Government's view, these issues are.
"I think the British people should be able to debate and examine this assessment. The Chancellor should state clearly what, in his view, are the constitutional barriers that he considers have been satisfied.
"Labour's policy of silence on the political and constitutional issues leaves them to hide behind their five so-called "economic tests" as the sole criteria for determining whether Britain should join. This strategy in itself is fraudulent, and the tests on their own amount to nothing more than four fudges and a fiddle.
Labour's 'Five Tests'
"While the Government has set five "tests" of the economic case for entry to the Euro - however subjective - it has laid out no criteria to assess whether or not these "tests" have been satisfied.
"The Chancellor has repeatedly refused to say what objective evidence could persuade him that his "tests" have, or have not been met.
"That is not surprising, because it is difficult to envisage what evidence might answer such a subjective test as "whether the single currency would create better conditions for business to make long-term decisions to invest in the UK".
"No serious commentator today believes that these tests provide any objective constraint on the Government's decision to take Britain into the Euro.
"One Professor of Economics at Imperial College said "Four of the criteria are so vague as to be meaningless...All four of these criteria are about the long-term consequences of joining. If the Government is in favour of joining - as it says it is - we must presume that it has already decided that the answer to these points is 'yes'."
"In other words, they provide for maximum political flexibility and minium economic rigour.
The Economic Realities
"Let me deal now with the fundamental economic reality of the European single currency - the one that Labour want us to join.
"Gordon Brown seldom presents any kind of economic argument for the euro. His position boils down to the claim that the euro will be good for the British economy if only he says it is.
"This morning, under pressure, he gave a rare hint of why he thinks the UK should join. He said the euro would bring transparency and stability, and reduce transaction costs.
"It's not difficult to see why Gordon Brown doesn't want to debate these arguments very often - and indeed keeps ducking a debate with me. None of them stand up to a great deal of scrutiny.
"Take the claim that joining the euro will increase transparency throughout Europe, increasing pressure on suppliers to reduce costs to customers. That pressure exists, but not mainly due to the euro. British consumers already make sure that they stock up with designer label clothes when they go to America. They are quite sufficiently sophisticated to convert prices from dollars to pounds. Other British customers now order their cars from Brussels. They don't need Britain to join the euro in order to understand that cars cost less in some other markets.
"Then it's argued that the euro will bring us stability. The euro has been anything but stable since it was introduced. The Governor of the Bank of England, Sir Edward George, says that if we had joined from day one, we would by now have faced a serious problem of inflation, the most de-stabilising of all economic ailments.
"There are those who argue that inward investment into the UK will be put in jeopardy if the UK doesn't join the euro. But they have yet to explain why inward investment has been strong for many years now when it has been evident that the UK has not been in the euro and might never be. Inward investment has been high because of the reputation for low taxes and light regulations built up over 18 years. If inward investment is to come under threat, it will be because that reputation is being undermined.
"Maybe the most common argument for joining the euro - and one deployed by Mr Brown this morning - is the claim that it will reduce transaction costs for businesses trading with others in the eurozone. That argument shows little sense of proportion. For most businesses, transaction costs are a fraction of a percentage point of their turnover. Even leaving aside the risks to economic stability of joining the euro, the costs of converting to the euro in the first place have been estimated as high as £36 billion - costs that will have to be borne by all businesses - whether they trade with euroland or not.
Twelve Economies, One Interest Rate
"None of the arguments put by those who want to join the euro address the fundamental economic reality of the single currency.
"Joining the euro means giving up our ability to have interest rates set according to British economic conditions. It means giving British businesses, British homeowners, British consumers and British savers the wrong interest rate. It puts economic stability at risk - and threatens jobs and prosperity. The single European interest rate is the one economic issue that Gordon Brown never talks about. We've had the wrong interest rates in Britain before, when we were part of the Exchange Rate Mechanism. Then, we had interest rates that were too high for our economic needs. Businesses suffered, homes were repossessed and jobs were lost.
"That happened because our interest rates were set with reference to events in Europe as much as events at home. The Conservative Party has learnt from that mistake. It is a sad fact that Labour seems desperate to repeat it.
"Inside the euro, we would be subjected to the same interest rate as the rest of Europe - regardless of whether it was well suited to British economic conditions. We would lose the agility to respond speedily and in our own interests to changing circumstances in the world economy.
"Labour talks in its manifesto of policies and targets for interest rates and inflation. Yet its plan to take Britain into the euro means that it can have no other policy on these matters.
"In summary, our worries about economic and monetary union are not just economic. The political implications cause great anxiety.
"Europeans are seeing a reduction in their democratic rights, as economic policy moves outside national competence and therefore beyond accountability.
"In the longer term, as Europeans discover that monetary union is causing them difficulties and hardship, and that they have no democratic means of protest or redress, their frustrations could bubble forth.
"The many doubts raised by EMU thoroughly justify the Conservative Party's position of keeping the pound. Tony Blair has made no effort to address the serious issues at stake."