LONDON — UNTIL now, Britain's Conservative Party seemed to be the only victim of its own internal squabbling.
But now, after months of infighting within the ruling party over Britain's role in Europe, it is the pound sterling that is at risk, according to Chancellor of the Exchequer Kenneth Clarke.
Even the spectacle of a weakened and plummeting pound, however, has not produced a political cease-fire between Europhiles and Euroskeptics within the Conservative Party -- those who want closer ties to the European Union through a single European currency, and those who would do almost anything to escape its embrace.
Mr. Clarke's statement last week -- that the two bickering factions have undermined sterling on world currency markets -- was the first such public admission by a senior Cabinet minister. But instead of quelling dissension, Clarke's statement at a meeting of EU finance ministers in Brussels appeared to inflame it.
Lord Tebbit, a former Conservative Party chairman and a senior Cabinet minister who claimed to speak for a majority of Conservative voters, said bankers in Germany would ''write Britain's annual budget'' if Britain joined a single European currency.
''Let us say the unspoken word,'' he added. ''We will not be subjected to a German Europe.''
Recent turbulence on currency markets has produced record lows for sterling against the German mark and forced the Spanish peseta and the Portuguese escudo to realign within the European Monetary System.
Though the pound has since strengthened slightly, as Clarke spoke, sterling was trading at 1:2.21 to the German currency -- the lowest it has ever sunk. Clarke told a Brussels news conference that, ''The markets have been affected by the political controversy over Europe in Britain. The fact that some of my colleagues are trying to raise the European dispute to a new height is not doing a great deal of good to confidence.''
Prime Minister John Major has struggled to ease tensions between the two wings of his party, and early in March the entire Cabinet apparently agreed that open wrangling should cease.
But, if anything, Clarke's attack on the Euroskeptics for allegedly undermining the pound has worked against his own leader's efforts. Last weekend, a group of Conservative Euroskeptics, called the Way Forward Group, published a scathing attack on the Chancellor's support for the EU and demanded his resignation.
The argument broke out as Major was flying back to London from a visit to the Middle East. He returned home to a sinking pound and open dissension within the ranks of the ruling party.
And in a strange twist, Michael Portillo, a leading Cabinet member and Euroskeptic, said that attacks by the Way Forward Group ''do not help our party at all.''
Political analysts broadly agree that Mr. Portillo is positioning himself to make a Conservative Party leadership bid at some time in the future.
By highlighting the impact of public quarrelling on the British currency Clarke gave the opposition Labour party a new angle from which to attack Major and his government.
Gordon Brown, Clarke's ''shadow'' in the Labour Party, called the Chancellor's remarks about the sterling ''a damaging admission that the Conservatives, with their internal chaos, are incapable of governing.''
Clarke continues to repeat his view that a European Monetary Union would not necessarily lead to political union -- an even tougher concession for Britons who say they would have to give up too much sovereignty. But four Cabinet ministers are on public record as saying that is not true.