The team could win around 10 titles in the championships which begin in the Hungarian capital tomorrow.
But Smith, made men's captain after Roger Black retired, believes the team should have a wider focus. After all, there's next year's World Championships and then the 2000 Olympics in Sydney, and he is hopeful that the Europeans Championships will be a springboard to global success.
"There is every reason to think we can win a lot of golds," said Smith, the high jumper who will be the first `non performing' captain following a neck injury in training that will rule him out until next year.
"But the important thing to remember is that winning or getting to the final of the European Championships is not the same as making it to the final at the Worlds or Olympics.
"Everybody should be using the Europeans as part of the build-up to Sydney because the 2000 Olympics are what it is going to be all about.
But a bagful of golds at the Nep Stadium would be a good starting point for a team that failed to win a title at the 1996 Olympics and last year's World Championships.
As well as Steve Backley in the javelin, Colin Jackson will be chasing a hat-trick of successes in the 110m hurdles.
Jackson has clocked 10 of the 11 fastest times by a European this summer, but the world record holder could be pushed by rising German, Falk Balzer.
The triple jumper Jonathan Edwards should return to the victory podium for the first time in a major event since 1995.
Mark Richardson will start favourite to beat his team-mate Iwan Thomas and maintain Britain's tradition in the 400m, while Solomon Wariso will be under pressure to complete a clean sweep of the medals.
The women's team has been depleted by the absence of the middle-distance runner Kelly Holmes and yesterday's withdrawal of the world indoor triple jump record holder, Ashia Hansen, through injury.
In the heptathlon Denise Lewis could finally take the next step on to the winners' podium.