Blair Presents Preparations for Adopting Euro

Prime Minister Tony Blair on Tuesday launched preparations for Britain to join the European monetary union, declaring in his strongest language yet that the country “should join a successful single currency.”

Blair presented to the House of Commons a 65-page blueprint for preparations to join the euro currency and said the government would spend tens of millions of dollars in the next few years to get ready.

“The government itself will be making active preparations for the euro in the belief that it will be in our interest to join in the future should our economic tests be met,” Blair said of his blueprint, the National Changeover Plan. “Businesses should start to do the same.”

He stopped short of setting a date, as some business leaders had hoped, but he indicated that Britain--the biggest and most important holdout in Europe’s great monetary undertaking--could adopt the euro as early as 2004.

Blair has said he will hold a referendum on the euro after the next general election, which could be held in spring 2001 or in 2002. If voters pass a referendum, he said, the government would then need 24 to 30 months to introduce euro notes and coins, and six months more to withdraw sterling currency.

“What we announce today is not a change of policy. It is a change of gear,” Blair said. “If we wish to have the option of joining, we must prepare. The sheer nature, scale and complexity of the arrangements require considerable time for such preparation.”

Blair’s strong language could prove a boon to the euro itself at a time when the currency--launched smoothly and successfully Jan. 1--has been steadily losing value against the dollar. It was introduced at $1.17. It reached a record low of $1.096 on Tuesday before closing at $1.101 in New York. The drop is blamed largely on slowing European economies.

Business leaders also report anecdotal evidence that Europe has not been as quick to embrace the euro as had been expected before its launch. They suggest this may be because businesses are first taking care of preparations for the new millennium, or because people are waiting for actual euro notes and coins to be issued in 2002.

The British prime minister had been under pressure from business and financial groups to take a bolder stand on monetary union, to signal his intentions to investors and begin the uphill task of persuading a skeptical public to relinquish the pound sterling.

According to a poll published in the Guardian newspaper last week, only 36% of the population would vote for joining the single currency, and 52% are opposed. This shows an increase of 7 percentage points in the “yes” camp since the euro was launched, mainly on the part of those who previously said they did not know.

Euro advocates have powerful adversaries to contend with in press barons such as Rupert Murdoch, owner of Britain’s popular Sun tabloid and Times broad sheet, who are opposed to the single currency.

Although Blair’s remarks went a long way toward answering business’s call, he left caveats: British and European economies must be brought in sync; and the euro, which was launched by 11 of the European Union’s 15 members Jan. 1, must prove itself a stable currency.

Blair wants to see a convergence of the British and European economic cycles, and also similar interest, inflation and unemployment rates. He wants to see more flexible labor policies and lower taxes on business across Europe.

At the same time, he wants to see that the euro holds its value and that the pound would be converted at a respectable rate if and when Britain would join the economic and monetary union.

Douglas Godden, an economist with the Confederation of British Industries trade association, called Blair’s euro statement a good start. “Very sensible . . . quite comprehensive. The fact that the government is committed to spending on this is useful,” he said.

British Banking Assn. spokesman Roger Brown said, however, that the prime minister’s remarks alone won’t be enough to convince the financial community that Britain will adopt the euro. “The banks will require greater clarity than they have at the moment to undertake the massive investment that will be needed,” Brown said.

Opposition Tory leader William Hague attacked what he called Blair’s “national hand-over plan” and said that Blair should slow down. He accused Blair of producing “an unnecessary, expensive and time-consuming” plan for which “voters have never given their consent.”

“It adds up to a strategy of pretending to give the people a choice while steadily diminishing that choice,” Hague said.