Question: A recent report by economists at Barclays bank suggested that Britain will remain outside the euro until 2006 at the very least, more likely 2011 because the British public has hardened in its opinion to the single currency. What do you make of those findings? Charles Kennedy: I always find that the thing about the economists and their judgements are that you get any number of scenarios depending on which was the last economist you spoke to - rather like lawyers or politicians, or journalists for that matter.

As far as I can gauge it, I think that the political intention of the government is that, if the conditions are seen to be met, and if the entry level was correct for the exchange rate, then the preferred scenario would be a referendum in 2003. That's assuming several variables are all in the same place at the same time. We would obviously have had a referendum quite a number of years ago and I think that there are those in the government that rather regret that they didn't at an earlier stage. My view is that the best political outcome for the country would be to resolve the issue, and hopefully, to resolve it in favour of entry, in the course of this Parliament, which suggests a 2003 referendum.

Question: In a few days, euro notes and coins will go into circulation. What effect do you think this will have on the euro debate? Charles Kennedy: I'm confident that this will move the debate on very positively. If you look at the millions upon millions of British people who now cross the channel or go to Ireland on holiday or for business, on at least an annual basis, they will soon begin to see that they are losing out financially if they are having to do endless currency transactions. They will also be going into major high street shops and supermarkets in Britain where provision will have been made for accommodating the euro, and they will begin to think about this. They will think about what we've seen, particularly in the motor car industry up until now, the transparency that the euro will reveal between prices here and prices elsewhere in the European Union. Where we seem to be paying an awful lot more for certain goods and services than other European countries and people will ask 'why is that?' So I think it will move the argument along in a very practical way.Question: Do you see it as a turning point in the UK's attitude towards the euro?Charles Kennedy: If not a turning point, it will certainly be part of a learning curve.Question: Why is there a need for a referendum on the single currency, why don't we just co-exist with sterling and the euro?Charles Kennedy: Well there are moves afoot in Northern Ireland. The Assembly there has been making audible noises that they want to run a parallel currency because of the geographic proximity with the Republic. So that maybe one argument that begins to get a buzz, but I think the key argument will not be running a parallel currency, it will just be isn't it going to be simpler and easier and actually more of a long term interest because it keeps us at the top table in Europe, rather than consigning us to country club membership of Europe.

Once you get to a referendum, that's comparatively straight forward in a campaign sense because everybody knows there's an end point, there's a question to be answered and there's a campaign to be fought and hopefully won. But when you're in this sort of no-man's land, it's extremely difficult to keep people's engagement, interest, involvement, keep the donations flowing and so on and so forth. We know the other side is well financed and will continue, quite properly from their point of view, to maintain their ability to get across their viewpoints about Europe, and about the criticisms of the currency and questions to be raised. So I think the next year is very important and we need to hit the ground running after January 1.