Blair fights to keep Britain in Europe's economic fast lane

Tony Blair yesterday insisted that Britain will not be consigned to Europe's slow lane following Friday's summit agreement to allow a more flexible, multi-speed European Union to emerge.

Tony Blair yesterday insisted that Britain will not be consigned to Europe's slow lane following Friday's summit agreement to allow a more flexible, multi-speed European Union to emerge.

As EU leaders wound up their two-day meeting in Biarritz with broad agreement on plans to allow for more integration among countries which want to forge ahead, the Government faced new questions over Britain's role.

"As the EU enlarges, of course it is the case that we need greater flexibility," said the Prime Minister, adding that there "must be no two-speed Europe, no hard core".

Although the detail has yet to be finalised, the Biarritz summit brought consensus on the need to dilute the right of any one country to prevent closer co-operation among groups of others.

The idea gained unstoppable momentum after the Danish referendum rejection of the euro which means that Denmark, Britain and Sweden will remain outside the currency for the foreseeable future.

Inside the euro zone there is growing pressure for more economic co-ordination, and Mr Blair conceded yesterday that the 12 countries might choose to harmonise tax policy more closely. He argued, however, that the acceptance of such a policy could not be used as a "precondition" to British entry into the euro. Nevertheless the issue underlines the likelihood that, even if Britain succeeds in joining the euro, it may find itself outside a new super-category of economic co-ordination.

With Europe expecting to admit anything up to 13 new countries, the EU is at a crossroads and diplomats are divided on whether a two-speed or a multi-speed Europe will emerge.

"We already have that," said one yesterday, while a colleague from a smaller country argued that "you will not get an 'avant-garde' because the rules will be decided by all of us". Mr Blair pointed out that Britain would want to take part in spheres of closer co-operation including defence and combating cross-border crime. Most small countries also feel it is in their interests to avoid the creation of a hard core which might either exclude them or overrule their concerns.

The final day of the summit gave its backing to Europe's new Charter of Fundamental Rights, listing entitlements from the right to life to the right to strike, to be proclaimed at December's summit in Nice. Britain has insisted that the document will not be written into EU law, ensuring it cannot be used to override national courts. Germany wants the document to form the basis of a future European constitution and Jacques Chirac, the French president, sought to keep the issue alive, arguing that it will be "for the Swedish presidency [starting in January] to determine what the 15 [member states] want in terms of legal status". However, Sweden has never backed a legally binding charter.

Meanwhile Mr Blair raised the stakes and angered eurosceptics by saying that it is willing to scrap the national veto in several new areas of decision-making, including industry policy, trade policy transport and the cohesion and structural funds.

On the table are around 50 new areas for majority voting and the French presidency argue that there is rough agreement to proceed on around half of these, though that is disputed by British officials.

A paper detailing a blockage on five central points of majority voting has been circulated by France, those listed being taxation, social security, asylum and immigration, anti-discrimination policy and trade. It is still hoping to reach agreement on more narrowly defined extension of majority voting in these areas.

EU states are divided over plans to cap the size of the 20-strong European Commission with small countries opposed to proposals which would deprive them of a right to send a commissioner. Big countries currently send two commissioners to Brussels and will relinquish the right to send one of them. In exchange they want an increase in their voting power in the Council of Ministers.

"Re-weighting of votes is absolutely essential because we will be having a smaller commission in the sense of our country not having two commissioners," said Mr Blair.