CBI chief accuses Brussels of having 'no real grasp' of business matters

The head of Britain's leading employers' group today launched a blistering attack on the European Union, accusing it of having "no real grasp" of business issues.

Digby Jones, the director-general of the CBI, warned that recent European Union policy initiatives showed that Europe had "retreated" from the free market reforms agreed at the Lisbon summit earlier this year.

The speech will be seen as a sign the CBI is in no hurry to retreat from the highly critical stance of Europe that it adopted when Mr Jones took over the top job two years ago.

Under his leadership the CBI has gone on the attack against the failings of the EU, while toning down its support for British membership of the European single currency.

In his new year message Mr Jones said the focus on euro notes and coins should not detract from the need for a fresh effort to get Europe back on course to a "dynamic, flexible economy". "There is no place for outdated dogma in EU policy making if Brussels is serious about global competitiveness," Mr Jones said.

He said the single market remained "seriously fragmented", saying many member states had "dragged their feet" by failing to implement legislation that would have helped to tackle Europe's "deeply painful" slowdown. "Politicians must not use the current global economic uncertainty to back away from the necessary reforms," he said. "Member states cannot afford to put up protectionist barricades at the first sign of economic trouble."

However, Mr Jones made only a passing reference to the euro, which will be launched in notes and coins format for 300 million people in 12 countries on New Year's Day. This tone will echo the thinking within Whitehall, where there is growing exasperation at the slow pace of reform within EU institutions.

The Government hopes that progress can be made under the Spanish presidency next year. They are focusing on the EU summit in Barcelona in March.

Some senior ministers including the Chancellor, Gordon Brown, and the Secretary of State for Trade and Industry, Patricia Hewitt, have made speeches in favour of reform during recent visits to Madrid.

At the same time the Treasury has been exerting pressure on other ministers to stick to government policy on the euro ­ that the UK will only join if the economy meets five tests and if the Cabinet, Parliament and the people in a referendum approve the plan.

However in his new year message, John Monks, the general secretary of the Trades Union Congress, urged the Government to make a decision on joining the euro.

He said: "Unless the Government pushes ahead with the process of its economic tests and starts a serious hearts and minds campaign, the conclusion will be that no referendum will take place before the next election. That would be disastrous."

Mr Monks said the manufacturing sector, which the TUC believes will see 300,000 jobs cut this year and next, would be especially badly hit if the UK continued to shun the euro. "A clear intention to join the euro would be one effective way of bearing down on the overvalued pound," he said.

His comments came as Peter Hain, the minister for Europe, made some of the most positive remarks so far by a government minister about the launch of euro notes and coins.

In an interview with The Independent, he said the fact British shops were preparing to accept the currency showed that the UK was "coming to terms with the fact that the euro is here to stay". However, he reiterated government policy on UK membership.