But he warned that further steps must be based on 'what is practically sensible and publicly acceptable'. And while it was time to stand up for Europe it was also time to 'rethink its future progress'.
In a speech in which he said Britain must keep open its options on joining a single currency, Mr Blair positioned any Labour Party he leads as firmly in favour of the European 'project', ensuring a continuing sharp division with the Conservatives, whom he condemned for having a 'minority mentality'.
They now, he said, 'expect to be in a minority, almost revel in it and measure Europe not in terms of what they achieve but by what they obstruct. The result is participation in Europe without influence, almost the worst of all worlds: never quite brave enough to withdraw and never quite confident enough to progress.'
But if Britain could not afford to be 'half-in and half-out for ever' the alternative was not some 'false choice' between 'a sort of bureaucratic federalism and a retreat into isolation'.
Nor, he said, did it involve a 'headlong rush into a pan-European state'. Rather it was 'a movement towards greater European co-operation, measured by what is practically sensible and publicly acceptable, but where public opinion is led as well as followed'.
Leadership was needed because 'unless rejuvenation of the European Union's sense of purpose and direction comes quickly, the initiative will pass to those hostile to the entire undertaking'.
Fundamental changes, from the collapse of communism to the failure of the ERM, to Europe's failure to act effectively in Bosnia, to the prospect of a much enlarged European Union, meant the public was right to pause for reflection. 'Our vision of Europe must cohabit with a changed world. It must be argued for. It cannot be a grand design handed down from on high, from governments to the governed.'
The next stage of European progress 'will come through persuasion or not at all'. But the economic case for Europe was 'more pressing than ever' with the United States establishing its own free trade area and with South East Asia breaking all records of economic growth. The timetable towards a single currency must be 'economically not politically driven, it cannot be forced in defiance of the economic facts'. But if the idea recovered momentum, Britain would have to decide whether it could afford to be left out. 'At the very least, therefore, the need to keep our options open and protect against the risks of exclusion should give urgency to policies to improve our industrial base, promote stability of growth and encourage real convergence.'
The focus on economic policy, however, should go wider than monetary union when joint action on jobs and skills could 'rekindle much-needed public support for the European project'. Action to open up EU decisions to greater national scrutiny and public debate was also needed, he said.
Mr Blair used his 1983 election address to voters to make a point of Labour's then policy of withdrawal from Europe, Michael Howard, the Home Secretary, said yesterday, after Mr Blair said in an interview that he had opposed the policy in his nomination speech. Either Mr Blair's memory had failed or he lacked the courage of his convictions, Mr Howard said.
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