The two referendum plans in play

Things can only get worse. For those already bored by the spate of will-we-won't-we-stories about joining the euro, the bad news is that they are certain to continue for months.

For the time being, two separate plans will remain in play. Plan A is the Churchillian option - "action this day". The referendum would be held as soon as possible - in practical terms, this means next spring. Plan B is the Augustine option - "make me good, but not yet". The referendum would be held soon after the next election.

My judgment, however, is that Plan B will prevail, because both men are likely to end up agreeing that the best way to secure a "yes" majority is to play the issue long. This is only partly to do with the five conditions Mr Brown set out in 1997. In general, the economies of Britain and euroland have moved closer together since then. Some doubts remain, chiefly to do with whether convergence is temporary or lasting.

Downing Street's neighbours must answer two tricky questions later this year. Is the public yet keen enough on the euro to be certain to deliver a "yes" majority? And: would an early referendum allow Britain to join at the right exchange rate? Ministerial fans of the euro are hoping that millions of people will return from Spain, France, Italy, Greece and Portugal converted to the case for Britain joining in. We shall see.

The chances are that the evidence will be, at best, inconclusive. After all, one of the common features of referendums in Britain and across Europe is that people tend to shy away from change at the last moment. In order to launch a successful referendum, the proeuro camp needs to enter the campaign at least 10 points ahead.

As for the exchange rate, the problem is that sterling is caught in the crossfire between the euro, which is too weak, and the dollar, which is too strong. Until this is corrected, Mr Brown believes, rightly, that the economic hazards of joining the single currency would be considerable.

So the deal is this. The Treasury would announce that the five tests are well on their way to being satisfied, but that a little more time is needed. The Prime Minister would then tell MPs that he had every hope of calling a referendum early in the next Parliament. He would say in the strongest terms yet that Britain's long-term destiny was to join the euro. Starting immediately, ministers would argue the case for entry.

Of course, if the British and euroland economies drifted apart, or if the euro/dollar exchange rate remained askew, or if the polls showed continuing public wariness, a post-election referendum could be postponed. But it is more likely that these obstacles will all have been removed. What is more, Plan B contains the bonus of causing confusion in the Conservative ranks at one more election.

To repeat: no decisions have yet been taken. Mr Blair remains tempted by Plan A. But, after talking to insiders, my betting is that, come the day to make the toughest single decision since Labour came to power, both men will conclude that the Augustine strategy is best.