German leader honours Blair

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GERHARD SCHRODER will today use his first visit to Britain as Germany's new Chancellor to try to convince Tony Blair that a reinvigorated Franco-German tandem is not about to send Europe's economic policy veering to the left.

The trip has been timed to avoid stoking rivalry in Paris and London for Germany's favours. Within days of his triumph over Helmut Kohl on 27 September, the Chancellor-elect was in Paris on his first foreign visit, sending a clear signal that friendship and co-operation with France remained top of the German agenda.

Mr Blair, however, has the privilege of hosting Mr Schroder's first foray abroad since being sworn in last week - a meeting befitting two men fond of identifying themselves as standard bearers of the so-called Third Way (or Neue Mitte - "new centre" - as Schroderism has been dubbed in Germany).

In fact, New Labour's hardnosed economics have more in common with the policies pursued by Mr Kohl's centre-right coalition than with the interventionist, reflationary strategy being pressed by Oskar Lafontaine, finance minister and chairman of Mr Schroder's Social Democrats.

Mr Blair signed on to the job-creating message sent by the 15 EU leaders at their informal summit 10 days ago in Portschach. But a cross-Channel philosophical divide looms between the left-of-centre governments in Paris and Bonn, and their counterpart here.

Today, Mr Blair and Mr Schroder are unlikely to let anything spoil a show of social democratic brotherhood. This afternoon the latter will hammer home his pro-business credentials when he addresses the CBI in Birmingham. The underlying differences may come to the surface when Gordon Brown holds his first bilateral meeting with Mr Lafontaine later this month.

The Prime Minister will build on the offensive he launched in Austria to maintain Britain's "leading role in Europe" despite shunning the European single currency, to be launched in 60 days time. Mr Blair is likely to leave the Chancellor in little doubt he intends to join the euro as soon as possible.