Portugal's leader warns Blair on euro

Portugal adopted the euro in 2002

Prime Minister Tony Blair has received a stark warning from another European head of government that the UK cannot play a central role in Europe unless it joins the euro.

If you want the rights of leadership in Europe, you need to take on the duties of the single currency

Jose Manuel Durao Barroso

Portugal's prime minister, Jose Manuel Durao Barroso, said that if the UK wanted the right to lead in Europe, it needed to take on the responsibilities of the European Union's biggest project.

The Portuguese prime minister made his comments in a BBC interview. He is the first head of government to say publicly what many leading politicians are understood to believe privately.

"If you want the rights of leadership in Europe, you need to take on the duties of the single currency," Mr Durao Barroso said.

Defence role

Tony Blair has repeatedly said he wants Britain to participate fully and wholeheartedly in Europe.

Passengers wait at strike-bound Lisbon airport

However, the UK prime minister has insisted that any government decision on joining the euro would be taken on the basis of five economic tests set out by Chancellor of the Exchequer, Gordon Brown.

The tests are designed to gauge whether the UK economy would be better or worse off within the single currency.

Mr Blair has also pledged to hold a referendum on euro membership before any decision is taken.

The Portuguese prime minister acknowledged that the decision on euro membership rested with the British people.

But he warned that if Britain stayed outside the euro, it would not be able to lead in areas such as defence policy, nor in the increasingly important issue of the EU's internal reforms as it prepares to expand by taking on new members from Eastern Europe.

National strike

Portugal's own membership of the euro has not been completely trouble-free.

It became the first euro member to face sanctions this year for failing to keep its budget deficit within a 3% limit defined by the EU's growth and stability pact.

On Tuesday it was facing a national strike in response to government measures to try to cut the budget deficit.

Train and bus services in the capital, Lisbon, were reported to be at a standstill and schools, government offices and hospitals were affected as workers stayed away.

The General Confederation of Portuguese Workers (CGTP) said the early signs were that a high proportion of its 800,000 members were on strike.

Cutting the deficit

Portugal's finance minister, Manuela Ferreira Leite, said she was sure Portugal would manage to meet the terms of the EU's stability pact this year.

Under the pact, EU members must ensure their budget deficits do not exceed 3% of gross domestic product (GDP).

"I have always been absolutely convinced that (the deficit) would be below 3%" of GDP in the 2002 fiscal year, Ms Ferreira Leite told Reuters news agency on Tuesday.

She is aiming for a budget deficit of 2.8% this year but the European Commission believes 3.4% is more likely.

Last year, Portugal's budget deficit was 4.1%.