The red has right of way.
The blue should have been prepared to exit already.
Many dual laned roundabouts also have lane markings indicating that the red car should be xiting anyway, with blue haveing the option to keep indicating right to take a later exit or to stay in lane and exit at 2.
There aren't many multi lane circles in London that aren't broken up by lights to allow entry from the various branches of the circle. This helps people to merge lanes to as it gives them time to get the attention of people in the neighbouring lanes.
But if there are no such 'fileter' lane markings, then red has the same right of way as they would if the circle was bent into a straight road, with 3 left turns and blue wanting to take the first exit.
The polite thing to do, however, if Blue is far enough ahead for their REAR turn signals (not their side or mirror ones) to be visible to Red then Red should slow to allow them to merge.
If Blue can do this and still exit safely, then they should do so, otherwise merge left and continue around the circle again.
('Polite' being the operative word and only available as an option to drivers in the USA's northernmost state of Canadia.)
