The Prime Minister, Tony Blair, gave unexpectedly strong backing to French calls for a delay in abolition of the tax perk during the Anglo-French summit at St Malo, which ended yesterday.
"We don't underestimate ... the difficulties," Mr Blair said after talks with the French Prime Minister, Lionel Jospin. "But there is a very strong agreement here that it is right we raise this issue and raise it forcefully because the successor regime is not satisfactory."
Campaigners for duty freehailed the statement as a breakthrough and praised Mr Blair for "climbing off the fence" to save the pounds 4.5bn industry, which is due to be scrapped in June 1999.
Britain's surprise support for a stay of execution was signalled by the Chancellor, Gordon Brown, earlier this week. Mr Brown failed to support Irish-led proposals for a study into the socio-economic impact of abolishing duty free last May but now says that if agreement could be achieved he too would support the move.
The Deputy Prime Minister, John Prescott, who also has responsibility for transport, has long been a supporter of a delay on the basis that tens of thousands of jobs linked to cross-Channel ferries could be lost. He said yesterday that a power- ful alliance of support was emerging.
The Duty Free Confederation claims that more than 30,000 jobs in Britain are at risk while an official French study published last week indicated that 12,000 ferry jobs in the Calais region would be hit.
The European Commission has refused to conduct a study and remains opposed to keeping duty free alive on the ground that it represents an anomaly in the EU single market.
But the French and the new German Chancellor, Gerhard Schroder, are both now agreed that the employment consequences of scrapping duty free outweigh single-market concerns, particularly since the planned harmonisation of excise duties and VAT has not materialised.
Germany's Finance Minister, Oskar Lafontaine, has pledged to use his country's forthcoming presidency of the EU to lobby for a reversal of the 1991 decision to end duty free.Reuse content