In a sign that Gordon Brown is seeking a ceasefire over the euro with Tony Blair, the chancellor's closest aide, Ed Balls, used a speech to academics in Oxford yesterday to deliver a positive assessment of the single currency.

Balls told his audience: "Britain's destiny is as a European power and...on many economic issues, we best pursue our national interest by deepening co-operation with our European partners."

The Times claims the pair are also rowing over the future of pensions policy.