Work to avoid paralysis in Europe, says Barroso

The European Commission president, Jose Manuel Barroso, yesterday abandoned hope of seeing an EU constitution in place in the next two or three years, urging member states to shelve the project and concentrate on averting paralysis.

Referendum "no" votes in France and the Netherlands have put the constitution on hold and political uncertainty in Europe has been exacerbated by the stalemate following Germany's elections on Sunday.

But yesterday Mr Barroso insisted that the EU need not be hamstrung by the lack of a constitution, and put pressure on Tony Blair to help solve an impasse over funding the bloc from 2007-13.

The European Commission president argued that, "in all probability, at least for the next two or three years, we will not have a constitution." He added: "The fact there should not be a constitution in the immediate future should not mean there is a paralysis in Europe." Mr Barroso's comments cast him in the role of a realist over the constitution and contrast with the statements of die-hard supporters, like the Luxembourg premier, Jean-Claude Juncker, who has demanded a continuation of the ratification process.

To come into force the constitution has to be ratified by all 25 member states and France and the Netherlands have no plans to hold new referendums. Mr Barroso yesterday sought to generate momentum within the EU to escape its current malaise. Following a brainstorming session by all 25 Commissioners on Tuesday Mr Barroso identified a series of EU priorities, the most urgent of which is agreement on spending plans after 2007.

Britain helped block agreement on the issue in June at a rancorous summit, but now has the job of brokering a deal because the UK holds the rotating EU presidency.

Mr Barroso argued: "It is really important that the [EU] presidency, and prime minister Blair puts all its energy into trying to find a solution in this period".

However he did not endorse calls by countries which are most anxious for the issue to be discussed by EU leaders at a meeting of in Hampton Court next month.

The British presidency has set aside this event for discussion on economic modernisation and the European social model.

Other Commission priorities include reviewing all existing legislation and to repeal unnecessary regulations and getting agreement on controversial legislation to liberalise services and regulate the use of chemicals.

However progress is dependent on the co-operation of member states which, so far, have not shifted from entrenched positions.

Meanwhile the UK played down fears that its efforts to push the economic agenda will be thrown off course because of the failure of Germany's pro-reform opposition leader, Angela Merkel, failed to win a clear victory in Sunday's elections.

Britain's minister for Europe, Douglas Alexander, in the first reaction to the inconclusive result by a British minister, said the demands for reform should survive the horse-trading between Ms Merkel, the leader of the Christian Democrats and Gerhard Schršder, the German chancellor she failed to unseat.

Speaking to the Independent, Mr Alexander said:: "During the campaign, both main parties acknowledged the scale of the challenges facing the German economy and both acknowledged the need for reforms.

"Germany remains vital for Europe's prosperity and for the UK, for whom it is a key export market. It is important that the case for reform endures during the discussions that will inevitably follow." Some diplomats were banking on Ms Merkel being a pivotal ally for Mr Blair in seeking reforms in the EU. He made a point of visiting her before meeting Mr Schršder during his last trip to Berlin.