If only the politics were right

The Government yesterday used a record-breaking fall in the jobless total to claim that the economy was roaring ahead.

But Kenneth Clarke promptly cast a cloud over the good news with an outspoken attack on the Tory Euro-sceptic myth-makers.

Illustrating the central Conservative frustration, that the party's deep political divisions on Europe divert electoral attention from the Government's success in curbing unemployment and inflation, the Chancellor directly challenged the dissidents within his party.

Earlier, ministers fell over each other to welcome a record-breaking plunge in the number of people claiming unemployment benefit, and a fall in the headline jobless total to below two million for the first time in almost six years.

John Major, on a visit to Northern Ireland, said: "Brit-ain's economy is now the lion that roars in Europe."

But Mr Clarke delivered a lecture in which he protested about the doubts that continued to nag away at EU membership. "Today, we are becoming prey to a mythology that we joined only an economic community, with no serious political dimension, and that the purpose of our membership was uniquely economic," he said in a lecture at the Royal Institute of International Affairs in London. "That is not the case." Mr Clarke said former Tory premiers Harold Macmillan, Sir Alec Douglas Home and Edward Heath had all argued that membership would enhance the political standing of the UK.

He added: "Europe offers us a growing opportunity to excel economically, and the best is yet to come." However, he warned: "Our continuing and future economic success, exploiting the opportunities of our enterprise economy, depends to a significant degree on Britain being and staying a key player in the politics of our Continent."

At a press conference on the latest jobless total, for last month, Mr Clarke was one of six ministers playing Santa Claus. They said Britain's jobs performance was the best in Western Europe. Growth was strong and sustainable, the Chancellor said, adding: "And I'm glad to say it has given more jobs to more people in time for Christmas." He said voters would have to ask themselves whether they wanted to risk a change to Labour's economic policies.

Ian Lang, the Secretary of State for Trade and Industry, said the advantages of the UK's flexible and efficient labour market would be threatened if a Labour government signed up to the EU's Social Chapter and introduced a minimum wage.

Michael Heseltine, the Deputy Prime Minister, said other European countries would take a lead from Britain. "Confidence in the British economy is growing and growing," he said.

The number of unemployment benefit claimants fell by 95,800 in November, the biggest monthly fall since the early 1960s. The headline figure was swollen by at least 25,000 with the introduction of the Jobseeker's Allowance, and Gillian Shephard, Secretary of State for Education and Employment, conceded that unemployment would not be falling as much every month. Labour picked on the admission as proof of another fiddle. Its employment spokesperson Ian McCartney said more people believed in Santa than believed the Government's unemployment figures.

However, economists said yesterday's figures were evidence of a buoyant jobs market, despite the distortions. The number of new jobs has increased according to the latest evidence, although many are part-time.

This was underlined by the announcement yesterday that the restaurant chain Pizza Hut will create 5,000 posts - a mix of part- and full-time - over the next four years.

Separate official figures confirmed that high street sales have remained buoyant. Last month saw an especially strong gain in sales related to the housing market, and in clothing and footwear.

Although the economy's pick-up has not brought much sign so far of wage and price pressures, the City concluded yesterday that a small increase in base rates is on the cards for the New Year. But Mr Clarke said a rise in interest rates was not inevitable. "Things have never been set so fair for the immediate future," he said.

Later, in his lecture, the Chancellor said: "People do not invest in Britain, they do not acquire our companies, they do not create new jobs in this country, just because they like to play golf or practise their English.

"They do it because they see Britain as a high-skill, low-tax, flexible, business-friendly entry-point into the big, rich consumer market place which is Europe today."

Mr Clarke said Britain and Europe went together for foreign investors, as they should for the British people. One led to the other and, as on the home front, good economics and good politics went hand in hand in Europe.

"As a country," Mr Clarke said, "we cannot choose to live by the European market-place economically and then exclude ourselves from the discussion of the political future of our Continent.

"That is the path of those who would seek British withdrawal from the EU, or a fundamental renegotiation of our membership terms. It is one which we rightly reject."