A REFERENDUM on whether Britain should join the single European currency could take place within a year, according to the Royal Bank of Scotland's group chief economist.

Jeremy Peat (pictured) told an audience of business people at a breakfast briefing in Lancaster on Wednesday that a referendum would need to be held by next autumn to allow time for euro bank notes and coins to come into circulation by the summer 2005.

He cautioned there were major risks if the UK entered the euro, such as losing flexibility on exchange rates and interest rates, but the nation could lose out on inward investment if it was outside the euro zone.

Closer to home, Mr Peat said the Lancashire and Cumbrian economies had held up remarkably well despite tough conditions.

"The manufacturing base is sound and has adapted to the challenges.

Likewise the tourism industry, which suffered particularly badly from the effects of foot-and-mouth disease and the aftermath of the September 11 atrocities, have showed positive signs of improvement," said Mr Peat.

The North West was enjoying a sustained period of economic growth and he expected that to continue over the coming months, but he added: "The North West is not seeing the same momentum as in the UK as a whole, which is char-acteristic of a region where manu-facturing is important."

Looking to the future, Mr Peat painted a largely upbeat picture, predicting that base rates would remain at four per cent until next spring and then slightly rise, unless the global recovery faltered.

And he expected a two per cent rise in the country's GDP next year.