Blair's 'neo-liberal' agenda sparks row on eve of summit

France is at the centre of a blistering eve-of-summit row over the future direction of the European Union, with political leaders in Paris accused of failing to do their job in explaining plans to revive the continent's sluggish economy.

France is at the centre of a blistering eve-of-summit row over the future direction of the European Union, with political leaders in Paris accused of failing to do their job in explaining plans to revive the continent's sluggish economy.

The dispute concerns a new piece of British-backed legislation that has crystallised fears in France that the European Commission supports a neo-liberal economic agenda inspired by Tony Blair. Ahead of a summit starting tonight, the European Commission president, Jose Manuel Barroso, launched a thinly veiled attack on the French President, Jacques Chirac, setting the scene for direct confrontation today and tomorrow.

With two opinion polls predicting a "no" vote in May's French referendum on the EU constitution, M. Chirac will seek to appease domestic opinion by demanding that four concessions are written into a proposed law to liberalise Europe's multi-billion-euro market in services. But Mr Barroso told a press conference that he had already offered to review the proposed directive, that the Commission "can't do the work of national politicians to explain what's at stake here," and that he "can't replace those who have the prime responsibility".

Although he did not name M. Chirac, Mr Barroso argued bluntly: "If French public opinion is confused, I'm sorry. It's not our fault."

Designed to break down the barriers to trade in services ­ which account for 70 per cent of European jobs ­ the services directive would allow firms based in one EU nation to offer services in another. Britain is an enthusiastic supporter of the plan which, it argues, could create 600,000 jobs.

Although it was conceived by the previous Commission, the proposed directive has become a symbol in France of a neo- liberal commission that has placed the regeneration of the European economy at the top of its agenda while rarely mentioning the "social Europe" of welfare protections and employment rights.

Despite a promise from the Commission to review the planned directive, M. Chirac cannot risk being presented in France as backing it. He wants a pledge that the directive will contain a guarantee of "fair competition" and exclude the possibility of "social dumping", by which countries undercut competitors by lowering taxes and employment protections.

In addition, the President has insisted that the public sector is excluded from the law. M. Chirac is also expected to demand changes to draft conclusions, which will focus on regenerating Europe's economy.

Although the EU remains popular in France, faith in Brussels has been shaken by the dilution of France's traditional dominance after the accession of 10 new countries last year, and the prospect of Turkey starting membership talks.

One EU diplomat said: "The debate in France is not about the detail of the directive, but about the EU we are in, and whether it is a liberalising, Anglo-Saxon one".

After comments from the Commission president last week, M Chirac described the directive in its current form as "unacceptable". He also telephoned Mr Barroso to remonstrate and ordered the press to be briefed about his complaint.

Mr Barroso was appointed last year after Mr Blair helped block the French-backed candidate, Belgium's Prime Minister Guy Verhofstadt.