The German Chancellor, Dr Helmut Kohl, is backing moves that would make it easier for Britain to make a late entry into the single European currency. He is proposing that a seat should be kept free for a British representative on the six-member executive board of the future European central bank.

According to senior German officials, Dr Kohl's personal initiative reflects a determination to see the British government's statement this week on strategy towards the euro in a positive light.

The British Chancellor, Mr Gordon Brown, said it would be unrealistic for Britain to make the decision to join the single currency before the next general election, due by spring 2002. But he said there were no objections in principle to joining.

In response, Dr Kohl is seeking to ensure that no unnecessary obstacles are placed in the way of late British membership, the officials say.

The German government is understood to have been given advance briefing on Mr Brown's statement. However, some officials fear that Mr Blair's indecision over the euro may prove as difficult to accommodate as that of Mr John Major, his predecessor as prime minister.

By keeping a seat vacant for Britain on the European central bank's executive board, Dr Kohl would reduce the disadvantages of late membership. It would help ensure that London had the same voice as the initial entrants.

According to German officials, Dr Kohl believes that Britain's eventual membership of the single currency remains likely. "The task is to make sure the British do not face any extra difficulties in the way," one official said.

The challenges facing Germany in qualifying for monetary union were highlighted yesterday when Mr Theo Waigel, Germany's Finance Minister, imposed a neartotal freeze on discretionary spending by the government to offset an expected shortfall in tax revenues and avoid higher government borrowing. The finance ministry said discretionary spending plans which would have an impact on the 1997 Budget would require Mr Waigel's prior approval.

Mr Waigel imposed a budget freeze earlier this year with the aim of saving DM2 billion (£772 million). Yesterday's announcement is intended to save an extra DM1 billion and so prevent an "unjustifiable increase in net federal borrowing" this year.

The government envisages new federal borrowing of DM71.2 billion this year, down from the 1996 deficit of DM78.3 billion but up on original plans for 1997 envisaging a deficit of DM53.3 billion.