TOKYO, July 19: British Prime Minister Tony Blair told Japanese business leaders on Saturday that Britain was working hard to get its economy ready for euro entry and progress had been made towards meeting the government’s own conditions.

In an enthusiastic pro-euro speech, Blair talked up the advantages of euro entry for Britain, giving his audience a message they wanted to hear, but he stressed he would do nothing to put British economic stability at risk.

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, Blair told the Tokyo audience, which included representatives from Japan’s leading auto makers.

The British government said in June that its five economic tests — designed to gauge whether Britain’s economy is ready to adopt the euro — had yet to be met.

But it said it would review those tests next year and it could hold a referendum on the euro as early as 2004.

The government has pushed through a number of reforms to help the economy meet the tests but Blair stressed that it could call a referendum before the impact of those reforms was fully felt.

We are not looking for completion of the impact of reform in all areas before recommending entry, Blair said. It is the aggregate nature of the changes that matters.

And he added that progress had been made towards meeting the remaining tests.

Some important shifts are already happening, he said, citing the housing market as one example.

Studies by the Treasury had shown that entering the euro would bring higher economic growth rates and a significant increase in Britain’s wealth, showing that euro entry was in the national interest, Blair said.

But the prime minister said he would go further than that and state that euro entry was essential to Britain’s future.

You are as aware in Japan as we are in Great Britain of the challenges facing us all as society ages. In the circumstances, maximising future income is essential.

Blair has said he is passionate about taking Britain into the euro. Chancellor of the Exchequer (Finance Minister) Gordon Brown, who set the tests, is widely held to be more cautious.

Both promised a nationwide campaign to sell the euro to a sceptical British public but so far there has been little sign of such a pro-euro push.

Blair said Britain’s economic policy was designed to enable it to be at the centre of Europe. He also urged European countries to make their economies more flexible, which would ease Britain’s entry into the currency zone.

Many of your companies want the certainty that the direction of British economic policy is one which allows us to play our full part in Europe. And it is, he told the Japanese executives.

Following his speech, Blair met with representatives of car firms Nissan Motor Co, Toyota Motor Corp and Honda Motor Co.

All three have plants in Britain and are worried their business will suffer while Britain remains outside the euro.

The manufacturing technology in Britain is high and the level of workers is good, but the risk of currency fluctuation within Europe is a problem for our business, Honda Motor President Takeo Fukui told reporters after meeting Blair.

The Japanese auto makers have been trying to lessen their exposure to the pound by buying car parts in euros, leaving as little as possible — such as wages and utility costs — to be paid in the British currency.—Reuters