Blair under pressure over euro

Tony Blair is today under pressure from several directions to spell out his plans for the single currency, on the eve of the introduction of the euro across Europe.

From midnight, the deutschmark, franc and lira will be replaced by the euro, which becomes legal tender for 300 million people across 12 EU countries, but not in Britain, Sweden or Denmark, with a transitional period of about two months for most countries as their national currencies are phased out.

Mr Blair is being urged to lead a personal campaign to persuade Britons of the euro's merits. The assessment of whether the conditions are right for Britain to join will almost certainly be made this year, in advance of a referendum on UK entry in 2003.

Deputy Prime Minister John Prescott said today that Mr Blair had shown "great leadership" over the euro, but had made it clear that there were five conditions to be met before they could recommend it to the country. He added: "Britain has one position, and we will make our position clear when the time comes for people to make that decision."

Wim Duisenberg, president of the European Central Bank, is today expected to proclaim "the dawn of a new era", signalling a move to far greater European integration.

There was more rhetoric over the notes and coins last night at a ceremony in the royal palace at Brussels when European Commission president Romano Prodi described it as a "historic moment in the construction of Europe".

He predicted that common usage of the euro would lead Britons to become 1confident with it, "in the way they are confident with the dollar".

In his New Year message, the Prime Minister said it was "massively in our interests that the currency succeeds" given the country's close trade links with the rest of Europe. However, he stopped short of issuing a rallying cry to supporters of the euro.

The Government is already showing signs of trying to dampen down "euro-fever", with Europe minister Peter Hain, who has been the most vigorous advocate of the single currency, saying that the Government would not be rushed into a decision on it, characterising its position as "euro-caution". It was "untenable" to argue either that Britain should join immediately or should never join, without taking account of the impact on the country's economy, he said.

Mr Blair was accused by Tory leader Iain Duncan Smith of "furtive manoeuvring" to "bamboozle" Britain into scrapping the pound.

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