Blair urges EU to reform

Tony and Cherie Blair arrive in Brazil

UK Prime Minister Tony Blair is issuing a warning to fellow members of the European Union that it must press on with economic reform.

Speaking in Sao Paolo, Brazil, on the second day of a tour to the region the prime minister will insist that the EU's economic summit in Barcelona in 2002 will be "make or break" for the reform and liberalisation agenda.

Barcelona next year is make or break for economic reform in Europe - a real test of our collective European leadership

Tony Blair

Mr Blair will make the speech later on Monday, but his official spokesman said it was notable that it was being delivered in Latin America.

He said that the venue was chosen to underline the UK's commitment to reforms similar to those it wants to see other nations adopt in future rounds of trade talks.

Top of the list, according to the spokesman, was the overhaul of the common agricultural policy (CAP).

He added: "You cannot argue for reform in Latin America unless you are prepared to face up to the need to modernise and liberalise outdated industries in Europe.

"The prime minister feels the need for European leaders to face up to these issues. Progress has been made but we need to make more."

Social justice

Mr Blair is expected to argue in his speech that liberalisation and not state intervention are the best ways to create social justice.

He will make his point saying economic success is achieved through "focusing on training, education, human capital - reforming welfare systems so they provide a hand up not a handout, pursuing policies that makes it easier for entrepreneurs to start businesses, not harder".

The prime minister will also urge speed in implementation of reforms already agreed at the Lisbon and Stockholm summits.

They include commitments on flexible labour markets, reductions in bureaucracy as well as greater competition in the financial services sector, in energy and technology.

Leadership

Mr Blair will say: "Barcelona next year is make or break for economic reform in Europe - a real test of our collective European leadership."

The prime minister is said to be impressed with the way that Brazilian president Fernando Henrique Cardoso has "courageously" pursued harsh spending cuts to try and aid his country's flagging economy.

But although the speech will focus on the economy of the EU, Mr Blair's spokesman said it would not dwell on the single currency.

Mr Blair is being accompanied on his tour by a 13-strong business delegation, including representatives from BP and Shell.

Historic meeting

Mr Blair has already visited Jamaica - where he promised British aid for the country's police force - and another key item on the itinerary of the six-day tour will be a historic visit to Argentina.

The meeting is intended to be part of the process of "normalisation" of relations between the two countries after the Falklands War of 1982.

Tension has remained since a British expeditionary force re-took the islands after defeating the Argentinean army.

But the prime minister and Argentinean President Fernando de la Rua will not be discussing the future of the South Atlantic islands.