Portugal provides more evidence of Europe going in Mr Blair's direction

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The Independent Online

No one, not even Tony Blair, pretended that the weekend European Union summit in Barcelona was an unqualified success. Mr Blair had spoken in advance of a "make-or-break" summit that would determine the future direction of Europe's economies. But in the Commons yesterday he did little more than defend his policy of forging alliances with like-minded leaders, which he credited with having produced "limited, but solid" progress.

With elections imminent in France and Germany, anything more than limited progress towards freer markets could not have been expected. That France gave any ground at all on deregulating its energy sector is a tribute to the preparatory work of lower-level officials, but it also illustrated how far France, and to a lesser extent Germany, are out of tune with the mood of today's Europe. France, not to put too fine a point on it, has found itself isolated in the fervency of its attachment to state regulation. Germany narrowly escaped censure last month for exceeding its stability pact targets.

Mr Blair, meanwhile, who presides over a country with higher growth, lower unemployment, and a less regulated economy than most of Europe, has made common cause with the centre-right leaders of Spain, and – more controversially – Italy to further the liberalisation of Europe's economies. It was no idle boast when he told the Commons yesterday that progress in Barcelona came about "in large part through Britain acting in alliance with others". The balance in Europe has been shifting, and continues to shift, towards free competition.

This trend was only reinforced with the victory of Portugal's centre-right Social Democrats in Sunday's election. Advancing a programme of low taxes, free markets and flexible working, the Social Democrats take over from a Socialist government discredited for its mismanagement of the economy. The shift was substantial, but not so great as to allow the Social Democrats to govern alone; they are expected to form a government with the right-wing Popular Party, which took more than 8 per cent of the vote.

Portugal follows Italy and Denmark, which last year elected centre-right governments, and ends a period of Socialist majorities in the EU Council of Ministers. Mr Blair, as a centrist, free-market prime minister, is neatly positioned to exploit that majority to keep up pressure for deregulation inside Europe, while allying himself with governments on the left to reassure sceptical trade unions and others at home about his commitment to the social safety net.

In reality, the rightward shift in Europe is less marked than the changes of government might suggest. In Portugal, as in much of the EU, left and right are finely balanced – and neither opposes either EU membership or the euro. The coming elections in France and Germany are closely contested, and neither may move to the right. Where governments have changed hands, the central consideration is less ideology than management of the economy. Which is precisely Mr Blair's point about Europe.

The unexpected reappearance of Baroness Thatcher was an added bonus for the Prime Minister. Her inimitable voice calling for "renegotiation" of Britain's EU membership and asking what benefits it had brought harmed only the Tories. She has put Europe back on the Tories' agenda after a quiescent few months – and reminded the rest of us of how Britain, and Europe, have changed since she left Downing Street.

Mr Blair may have been less than impressed by his latest excursion into Euroland – it was, he quipped, "as ever, a joy". But his irony may be misplaced. Slowly, but inexorably, the EU may be moving his way.