Blair told: Tory stance on Europe struck chord

LABOUR WILL today admit that the Conservative Party's sceptical line on Europe is much more in tune with public opinion than the positive approach adopted by Tony Blair.

In a remarkably frank report on why Labour lost last month's Euro elections, party officials concede: "Tory strategy had greater resonance, with the perceived threat of losing the pound and accusations of a Euro gravy train."

The document will be discussed by Labour's National Executive Committee this morning. After taking part, Tony Blair will launch a crusade to turn the Eurosceptic tide in Britain, in the hope of paving the way for eventual British membership of the single currency.

In a keynote speech in London, Mr Blair will in effect "go back to the drawing board" by making the case for "constructive engagement" in Europe. He will then start work on his long-awaited Cabinet reshuffle.

Ministers admitted last night that they still had a mountain to climb on the EU, because many voters were sceptical about it. Downing Street said: "There are forces of anti- Europeanism. They are in the political system and parts of the media. One of the things we should acknowledge after the Euro elections is that within real public opinion, there is strong anti-European feeling among some people."

Mr Blair's spokesman conceded the Government was not yet ready to launch the fight to win public support for the single currency. "Where we are now is still winning the battle for Labour's positive engagement in Europe," he said.

The Prime Minister will insist that the Government's policy on the euro has not changed. This will be a setback for Cabinet ministers, including Gordon Brown, the Chancellor, who are considering a plan to delay the promised referendum on British membership from 2001 to 2003 or 2004 in an attempt to neutralise the issue at the next general election.

Last night Downing Street hit back at a speech by Yves-Thibault de Silguy, the outgoing European Commissioner responsible for the euro, who said in London yesterday that Britain's failure to join was reducing its influence across the EU spectrum and could leave it in the slow lane of a "two-speed Europe". He warned that Britain would not only pay an economic price for staying out, but also a political one as the Franco-German axis gained new importance. Mr Blair's spokesman admitted that Britain would not be able to influence the single currency from outside it, but insisted the Government now enjoyed more clout in the EU than its Tory predecessor because of its more positive approach.

Mr de Silguy sparked a political row by warning that the 11 EU countries who launched the euro in January would bring in a common tax system without Britain.