LONDON, 18 September 2003 — A British referendum on whether to adopt the euro is still possible before 2006, Prime Minister Tony Blair insisted yesterday, just days after a Swedish “no” vote dealt a severe blow to the pro-euro campaign. Blair refused a challenge by the leader of the opposition Conservative Party, Iain Duncan Smith, to rule out a plebiscite before the next election, due by mid-2006 at the latest.

“We should keep our options open because the right test to apply is whether it is in the economic interests of this country. We’ve said we will return to that issue again next year and I see absolutely no reason for this country to say it will foreclose its options and rule out membership of a single currency,” Blair told Parliament. But Duncan Smith, whose party strongly opposes joining the 12-nation single currency area, told Blair his “dreams, schemes and hopes to scrap the pound are utterly wrecked.”

A “yes” vote by Sweden in Sunday’s referendum had threatened to leave Britain as the only member of the 15-nation European Union not using the euro as its currency if Denmark had followed in its neighbor’s footsteps. But the anti-euro campaign has been quick to argue that the Swedes’ decision proves the introduction of the euro in Britain and across Europe is not inevitable.

Meanwhile, minutes of the last Bank of England policy meeting indicated yesterday concerns about consumption growth and soaring consumer debt could prompt a rise in British interest rates in the near future. The nine members of the central bank’s Monetary Policy Committee voted unanimously on Sept. 4 to keep interest rates steady at the current 48-year low level of 3.50 percent, a record of the meeting showed. However, some policy-makers pondered the need for a possible rate rise. “For most members this decision was clear cut, although for some it was more finely balanced,” the minutes said.

In July — the month when interest rates were lowered to 3.50 percent — British consumers racked up the biggest increase in total borrowing ever recorded, according to Bank of England figures.

Retail sales have also risen, with a particular surge in June prompted by hot and sunny weather causing concern that inflation could climb even further above government targets.

In another development, British unemployment fell to the lowest level for 28 years during August, official figures showed yesterday in a boost to hopes that the country’s still sluggish economy might have turned a corner. The total number of people claiming unemployment benefits during the month was 930,800, the lowest level since September 1975, the National Statistics office said.

The figure fell by 6,900 people during the month, significantly greater than the 2,000-person drop expected by economists, although this left the unemployment rate steady at 3.1 percent for the 20th successive month.