Politics: Portillo warns of euro risk

Michael Portillo last night reaffirmed his credentials as a potential leader of a Euro-sceptic Tory party with a stark warning that the single currency could lead to a return to "extremist nationalism" such as Nazi Germany or Franco's Spain.

Mr Portillo, who lost his seat at the election, went further than the Tory leader, William Hague, in rejecting Britain's entry to the euro by making it clear he was opposed on principle.

Tory Euro-sceptics were delighted by Mr Portillo's lecture in London to the right-wing think-tank, the Institute for Economic Affairs, which contrasted with Mr Hague's position of ruling out entry to the euro for at least 10 years.

Mr Portillo said that the end of the Second World War had seen the restoration of democracy. His father had fought for democracy in Spain "and was a refugee from tyranny for 20 years".

Democracy was the best guarantee of security, but he warned: "If we shoe-horn Europe into an artificial union, we will not abolish nationalism, indeed, we risk stirring it up ..."