- guardian.co.uk, Sunday July 20 2003 09.30 BST
Britain will be billions of pounds better off if it joins the European single currency, saving enough money over the next 30 years to pay for the whole of the National Health Service, the Prime Minister said yesterday.
In an uncompromisingly pro-single currency speech in Japan, Tony Blair said it was 'in the national interest that Britain should join the euro'.
Despite Treasury fears that joining the single currency too early could lead to increases in tax rates in Britain, Blair made it clear the Government was on track to call a referendum on whether to join the euro shortly before, or after, the next general election.
'Over the long term, monetary union is in the national interest,' he told business leaders and politicians in Tokyo
Blair said that joining the euro would increase Britain's wealth - gross domestic product (GDP) - by a quarter of one per cent every year. After 30 years that would mean an increase in GDP of between 5 and 9 per cent.
In a clear signal that paying for public services will be one of the main planks of the referendum campaign to persuade a sceptical public that Britain should join the euro, Blair said that the monetary benefits were more than the Government spent every year on the NHS or pensions and education combined.
Number 10 believes that by linking the euro and the country's wealth and public services they can win over the large majority of people who say they would vote against joining in a referendum.
With only a passing reference to the mantra that Britain will only join the euro when the 'economics are right', Blair said the Government was 'working hard to ensure that it can [join]'.
He said that Britain's more flexible economy would mean that once a member of the euro, the UK economy would outperform its more economically-rigid neighbours.
'Provided there is sufficient convergence and flexibility between the UK and euro zone [the area of Europe already using the euro], we could enjoy a period of superior growth,' Blair said.
That the Prime Minister felt the need to make such a pro-euro speech in Japan reveals the pressure the Government feels from Japanese businesses based in Britain, which have threatened to withdraw if the country does not join the single currency.
They argue that changes in exchange rates between sterling and the euro makes long-term planning difficult and increases costs.
Nissan, the Japanese car giant with a huge plant in Sunderland in north-east England, has made it clear that being a member of the single currency would have a significant impact on its future decision on where to build its cars in Europe.
Blair said that although it was important to meet the five tests on the single currency laid down by the Treasury, structural reforms in areas such as the housing market would only need to be set in train rather than completed before Downing Street would recommend joining.
Blair's suggestion that Britain would need only to be 'on its way' to convergence with other European economies would markedly shorten the timescale of joining the single currency.
