Persson tells Swedes to keep faith in euro

Prime Minister Goran Persson appealed to Swedes yesterday not to dismiss the euro in next week's referendum because of economic troubles in Germany and France, and said the vote could be won.

Fighting to turn the tide against polls that give a lead to the "no" camp - which includes some cabinet ministers, the political left and many women - Persson said the final week would be crucial and the race would be close.

Sweden is a member of the European Union but, like Britain and Denmark, stayed out of the single currency area formed by 12 other EU members in 1999.

The spectacle of the two euro zone giants breaking budget deficit rules in the EU's core Stability and Growth Pact has been a major factor behind Swedes' lack of enthusiasm for adopting the single currency in September 14's referendum.

But Persson said the fact that they were being upbraided by the executive European Commission and, in Germany's case trying to correct the deficit, should encourage Swedish voters.

"The 'no' campaign is claiming all the time that the Stability Pact doesn't work. I have the opposite opinion."

"Just the fact that Germany is monitored... and that the Commission sticks to the criteria tells you one thing: this is a stability pact for all member countries inside the monetary union, it's not only for the small ones," he told Reuters.

Persson had told reporters Sweden might wait to enter the euro if the Stability Pact collapsed. But he told Reuters he had "every reason to believe" a referendum mandate "could be used in such a way so we could enter monetary union on January 1, 2006".

With two polls out this week showing the lead the "no" side has maintained since April narrowing, Swedish financial markets showed a flicker of confidence in a "yes" victory, with interest rates converging slightly towards euro zone levels.

Persson has long predicted sentiment would turn in the final days when the 20 per cent who are undecided make up their minds.

New polls by Gallup and SKOP showed support up at 36 and 39 per cent respectively and opposition down to 44 and 49 per cent.

"I think the two last weeks and even the last week will be decisive," Persson said, recalling that in 1994's referendum on EU membership, 32 per cent of voters made up their minds in the last week - when opinion suddenly switched in favour of the EU. "In the end I think it will be a very, very close race."