The No campaign has declared victory and shut up shop, confident that Britain's chances of joining the euro are as close to zero as they could possibly be.

The "Britain in Europe" people, by contrast, are fighting gamely on, inviting cruel comparisons with those few Japanese soldiers, isolated on desert islands, who carried on fighting a war long since lost.

We have come a long way in a short period of time: many of us thought that it was all over bar the shouting when UK Chancellor Mr Gordon Brown, less than a year ago, began his famous assessment of the five tests of entry. Brown may have judged that we failed most of those tests, but that looked like a softening-up exercise.

The Treasury signalled its intent in the clearest possible terms when it unveiled its view of the appropriate level of entry.

You do not get that far unless you have made a few key decisions; the Chancellor seemed to be saying that once he had got the housing market sorted out, Britain would be ready to join.

Since then a lot of minds have clearly been changed. Politics and economics have combined to deal a lethal blow to Tony Blair's ambition to take the UK into the single currency.

The economics are simple and best explained by what happened to global growth during the second half of last year.

The US economy posted a blistering 6 per cent rate of expansion, China's was close to 10 per cent and even poor old Japan managed something approaching 5 per cent.

The global economy managed to grow at its fastest rate for nearly two decades. And all Europe could struggle to achieve was 1½ per cent. And from there it has gone backwards: growth has slowed, even from this pathetic rate.

The European economy is the closest thing to a slow motion train wreck that you will ever see. The upcoming assessment of the Lisbon Agenda will be a farce; the structural economic reforms initiated at that famous summit have failed to take place.

Anyone who argues that Europe is making progress with structural reform fails to appreciate how large the structural gap with the rest of the world is growing: everybody else is also reforming, but at a much faster rate.

Even those people who have long thought that the arguments for joining the euro are entirely political have had to sit up and take notice.

The fact that Europe's mysterious problems with consumer spending (there never seems to be any) are now infecting previously immune economies - like the Republic's - has not gone unnoticed.

If political and economic fundamentals ever have anything to do with the value of the euro, it will collapse.

The political arguments for entry have all but vanished as well. The transatlantic rift has widened to such an extent that even committed Europhiles acknowledge that Britain can no longer sit, uncomfortably, on the fence that divides Europe and the US.

For better or worse, we are now aligned with an America that, at best, has given up on Europe and is, at worst, growing increasingly contemptuous of the EU's institutions.

Europe's inability to deal with security issues on its own border (the Balkans) or do anything about its known deep-seated economic problems leaves some US observers to conclude that it is time to abandon the old Continent.

The contempt in which Europe is held should not be underestimated. And it is not just about economic growth or the row over Iraq. From inaction on the growing pension crisis to Europe's hopeless military capabilities, Americans are asking the important questions.

The other day, in a simple statement of fact, the head of the Washington-based Centre for Strategic and International Studies made the (related) points that inaction on demographic problems was going to weaken Europe a lot further and that the combined military forces of the EU would be easily beaten in the field by the US Marine Corps (a small part of the US army) alone.

The point here is not a cheap one about relative power, but more about the ability to organise and get things done: Europe's armies are about the same size as those of the US but are hopelessly managed, inefficient, technologically backward and ill-equipped to deal with modern threats. All problems that students of the relative position of the US and EU economies would recognise.

Of course, the implications of all of this run a lot deeper than the mere decision over euro entry. But these developments are now washing through the British political system and insiders acknowledge that the first casualty of Europe's growing irrelevance is UK participation in the single currency.