Blair presses EU to change

Mr Blair (centre) will leave Brazil for Argentina

UK Prime Minister Tony Blair has served notice to his fellow European leaders that they must introduce swift economic reforms.

Speaking in Brazil on the latest leg of his Latin American tour, Mr Blair said the economic summit in Barcelona next March would be "make or break" for the reform agenda.

I am not laying down new conditions

Tony Blair on the joining the euro

That summit comes three months after euro notes and coins start circulating on the continent and some newspapers have seen the speech as a warning that without the changes Britain will be reluctant to join the currency.

But both Mr Blair, who also pressed for reform of the European Common Agricultural Policy (CAP), and his officials say his remarks do not mark a policy shift on euro entry.

Crucial timing

The prime minister told reporters in Sao Paolo: "The decision is at a crucial time, particularly straight after the launch of the euro.

"The decision is at a very crucial time for Europe."

Britain's decision on whether to join the single currency was not "specifically geared" to economic reform, said Mr Blair, but change was important.

Pressed by reporters, he said: "I am not laying down new conditions. The conditions are as we have set out but we have always stressed the importance of economic reform."

Mr Blair's family will join him later in Mexico for a holiday

The moves Mr Blair sees as crucial at the summit involve ending trade restrictions and labour inflexibility.

He said the EU could only achieve its aims of social justice and full employment through a programme of economic liberalisation.

"Barcelona next year is make or break for economic reform in Europe - a real test of our collective European leadership," he told business leaders.

Delivery vital

"We already have a strong package of structural reforms to modernise Europe, increase employment and promote growth. But we need to deliver it."

Mr Blair said opening up agricultural markets offered big prizes for countries like Brazil and he underlined his commitment to reforming the CAP.

The prime minister's official spokesman said Mr Blair had chosen to make the unexpectedly strong speech in Brazil as the EU needed change itself if it wanted other regions to change.

"You cannot argue for reform in Latin American unless you are prepared to take up the need to modernise and liberalise outdated industries in Europe," said the spokesman.

Euro message

He insisted that the speech was about liberalisation and that Mr Blair was not trying to send a message that the UK would only join the euro when reforms were complete.

After the speech, Liberal Democrat foreign affairs spokesman Menzies Campbell attacked the government's "contradictory signals" about its intentions on the single currency.

Argentine President de la Rua will meet Blair on Wednesday

"EU leaders would be quite entitled to tell Mr Blair to put his own economic house in order before telling them what to do with theirs," he said.

For the Conservatives, shadow foreign affairs minister Cheryl Gillan welcomed Mr Blair's rhetoric.

But she added: "The challenge now is to turn his words into specific action and concrete proposals."

Historic visit

Continuing his Latin American tour on Tuesday, Mr Blair will visit an aircraft factory in Brazil before heading for the Iguacu waterfalls on the border with Argentina.

It is there he will have talks on Wednesday with Brazilian President Fernando Henrique Cardoso and Argentinean President Fernando de la Rua on the border of their two countries.

After that meeting, Mr Blair will cross the frontier and become the first British prime minister to set foot on Argentine soil since the Falklands War.

The islands' sovereignty is not on the talks agenda but the visit is intended to help "normalise" relations between Britain and Argentina almost 20 years after the war.

But the Conservatives are pressing Mr Blair to "stand up" for the island.

Cheryl Gillan said: "He must make it absolutely clear during his meeting with President Fernando de la Rua that the sovereignty of the Falkland Islands is not up for negotiation."