Blair upbeat about early euro entry

Tony Blair yesterday gave his most bullish assessment yet of the prospect of Britain signing up to the single currency.

In a speech to Japanese business leaders in Tokyo, he spoke enthusiastically about the euro and the likely benefit ­ between five and nine per cent of GDP in 30 years ­ of joining.

He said the direction of the policy was clear. "The economics must be right. But if they are, we will recommend membership and in the meantime we will work to ensure the economics are right."

Mr Blair said that "some important shifts are already happening" that would ensure the right moment for euro entry would come ­ but he warned that entry to the euro at "the wrong moment" would hold back medium-term growth.

"I see in Britain the possibility of growing a little faster by way of reforms and a closer engagement with the continent of which we are part," Mr Blair said.

The Prime Minister also vowed to tackle the menace of North Korea's nuclear weapons programme, voicing his support for multilateral talks as tensions worsen.

After a meeting with Japan's Prime Minister, Junichiro Koizumi, at his mountainside retreat in Hakone, Mr Blair said: "There is a real danger posed by North Korea and its nuclear weapons programme, and I do not think we can turn away from that danger or pretend it doesn't exist."

Shots have been exchanged in the demilitarised zone between North and South Korea in recent days, and Seoul said yesterday that the North Koreans had moved heavy artillery closer to the dividing line. But while Japan favours engaging in talks with North Korea, Britain is spearheading plans to send in Royal Navy ships as part of a multinational blockade of North Korea.

The Ministry of Defence would not confirm that British naval vessels are due to head for the region after Britain last month signed up to the Madrid Initiative ­ a plan by 11 countries to stop weapons technology entering or leaving North Korea. But the Secretary of State for Defence, Geoff Hoon, recently told journalists in Canberra, the Australian capital, that the blockade should be extended to ships and aircraft suspected of carrying contraband which could finance the country's nuclear programmes.

Mr Hoon said: "We do need internationally to work together to isolate North Korea and to demonstrate that we will not tolerate the way in which they both develop and proliferate weapons of mass destruction."

The British stance on North Korea, however, has prompted fears that Britain is ready to be drawn into another American-led war. Patrick Mercer, a Tory MP and ex-soldier, predicted Britain could again be at war "within a year".

Peter Kilfoyle, a former Labour defence minister, said: "North Korea is on the same list as Iraq. We pulled back east of Suez and it seems as though we are expanding our role again,"