Levene: City can do without the Euro

Tony Blair's hopes of winning public support for British membership of the single currency suffered a setback yesterday when the Lord Mayor of London said there was "no indication" that the City would be damaged by remaining outside it.

Tony Blair's hopes of winning public support for British membership of the single currency suffered a setback yesterday when the Lord Mayor of London said there was "no indication" that the City would be damaged by remaining outside it.

Lord Levene of Portsoken revised the views he expressed in Febuary when, after a tour of European capitals, he warned that there could be adverse consequences if Britain remained out of the euro for four or five years.

Yesterday he said: "You have to ask when that process will start. After 10 or 11 months there is no sign of that. Quite the contrary - there are increasing investments in the City."

The outgoing Lord Mayor, who stands down on Friday, saw no sign of that changing "unless and until there is an absolute decision that the UK is not going to join. It's not going to happen until then." He added: "At the moment, the potential downside of the UK not joining has not happened at all."

Lord Levene said that the first 11 months of the euro showed that London trading in corporate bonds issued in the euro was now projected to be 25 per cent higher than trading last year in equivalent European currencies.

The business was projected to be worth $1,500bn compared with $1,200bn last year. The latest figures also show that trade in euro-zone stocks in London was 59 per cent greater in the first half of this year than in the first half of 1998.

Lord Levene stressed that his judgement was on the basis of only 10 or 11 months, and that a decision not to enter the euro could have a significantimpact on City trading. Nor was he trying to influence the political decision about joining, he said.

But he insisted that the question of British entry appeared "less and less core" to the issue of the City's ability to trade successfully as a financial centre. "The decision is no more core than having the UN in New York," he added.

The Tories seized on LordLevene's remarks. Francis Maude, the Tory Treasury spokesman, said: "This knocks on the head, once and for all, the idea that the City of London would suffer if the UK didn't join the single currency. It's about time that Tony Blair admitted that Britain can prosper in Europe but keep the pound."