The European Union urgently needs economic reform to rekindle growth and must gradually reduce the share of its budget it spends on farm subsidies, British Prime Minister Tony Blair said today.
He told the European Parliament in a speech that serious progress on structural economic reform would build public support for sensible, rational fiscal policy. His address was setting out Britain's priorities for its six-month presidency of the bloc from July 1st.
"And we need such reform urgently in Europe, if Europe is to grow," Mr Blair said.
He insisted he was not seeking to scrap EU farm subsidies overnight but to reduce them gradually after the failure to agree a long-term EU budget last week. "A modern budget for Europe is not one that, 10 years from now, is still spending 40 per cent of its money on the Common Agricultural Policy," Mr Blair said.
Last night British Chancellor of the Exchequer Gordon Brown said Europe had to respond to the rejection of the EU constitution in France and The Netherlands.
He said centralising power in Brussels would not do and urged EU leaders to learn the lesson of the continent's flagging economic growth and voter attachment to national identity.
But many EU leaders blame Britain for torpedoing a budget deal after it refused to give up any of Britain's annual rebate from the European Union's coffers without a guarantee of reform of farm subsidies that largely benefit France.
But as the recriminations continued, Mr Brown said agricultural subsidies were a relic of the past and symptomatic of the malaise affecting the European economy as countries such as China and India raced ahead.
"With 40 per cent of the European union budget spent on agriculture, only 2 per cent of Europe's economy, the budget issue itself is a symptom of an even greater issue about the future of the European economy," he said.