The Prime Minister told a meeting of socialist leaders, who hold power in 11 of the EU's 15 member states, they must not squander their opportunity by slipping back to traditional left-wing economic policies. Mr Blair said the European social model should be "modernised" to allow EU countries to compete in the global economy. This directly contradicted Lionel Jospin, the French Prime Minister, who earlier told the Milan conference there should be a European pact for jobs and growth involving governments, employers and trade unions.
But Mr Blair insisted that "demand-side policies of economic management" were no longer a sufficient guarantee of prosperity, and there was a "vital need" for economic reform.
The Prime Minister said the single currency "can be a force for stability" but added: "It's only a foundation. Alongside it must come real economic reform that tackles the fundamental supply-side weakness of the European economy."
He insisted his call for reform did not mean he was opposed to social justice. But he argued that Europe was not delivering that - pointing to high unemployment, rising welfare costs and social exclusion.
Mr Blair's strong endorsement of America's economic strategy will anger some EU leaders, already uneasy over his co-operation with President Clinton on foreign policy.
He said Europe needed a dialogue with the Democratic Party, so the EU and US could learn from each other.
Mr Blair insisted that his "third way" between old-style socialism and right-wing policies was rooted in the centre-left. "It is the means that have changed. Enterprise and fairness used to be seen as in competition. Today they must be seen as partners."
The Prime Minister warned: "We must go further, we must be bolder and we must do it with definition and confidence. If we don't, make no mistake: the right will move in to the ground we vacate. It is not enough to be parties of social justice. We must also be parties with the vision of the future our people understand and can be inspired by."
Michael Howard, the shadow foreign secretary, accused Mr Blair of "saying one thing in Britain while doing another in Europe". He criticised his "Trappist silence" on the political dimension of the single currency, and said the EU socialist meeting had agreed a manifesto which would "take Europe down the path of more red tape and more regulation".
Ken Livingstone, Review, page 4Reuse content