Why most of Europe secretly wants us to lead

France and Germany never tire of telling us how they think Europe should develop. There should be one currency, one set of interest rates, one economic policy, all based on the decisions of the Frankfurt bank. Europe should volunteer for common weapons purchasing, an amalgamation of its defence industries and some common army divisions.

From there it should progress to a common defence: one army, one airforce and one defence policy. Germany has said that political union is its price for monetary union. In other words France and Germany want to strike out in a bold direction of merging their two countries. For some the question is: who wants to join them? For the rest it is: who will they allow to join them?

The United Kingdom now needs to influence Europe decisively for the better. We are European by history, geography, culture and interest. No sensible person disputes that. Being European does not mean that we should always agree with whatever France and Germany propose. We should set out an alternative vision of a Europe prosperous and free, a Europe open to trade with itself and the rest of the world, a Europe in the forefront of new developments.

We should challenge the idea that Europe will only be rich and at peace if monetary union is followed by political union, and if more and more countries are brought into the EUwithout the chance to defend their national interest properly.

The German government sees Western European monetary union as similar to Germany's recent monetary union, when East joined West. It underestimates the important role common German nationality and language played in merging the DM and Ostmark. It skates over the great costs incurred in that union. There is still a hefty surcharge on the income tax bills of all West Germans to pay for it, and there are still very long dole queues in the east.

Germans, while grumbling, accept it because they belong to one country. How would people in south-east England feel when told that tax bills were to go up to pay for the less prosperous parts of a Western European currency union, such as the north-east of France? The UK currently pays pounds 10,000m a year as its gross contribution to the EU: that's 4p out of the standard income tax rate of 24p, or one-sixth of the total. That could easily double to 8p to pay for a currency union. Is it worth it? What would we get in return?

Some argue we should be strong advocates of a wider EU, bringing in Hungary and the Czech Republic and others as soon as possible. I have no objections to that, but it does not solve the other problems or lead to a less intrusive or less centralised Union. Every time in the past that the community has expanded we have seen the centre take more power and erode the national veto further. It will press for exactly the same this time round. By all means let's widen the Union but let us do so while loosening its grip, trusting nations and localities to do more and Brussels to do less.

The UK should set out a clear vision at the next intergovernmental conference. No other state will do so, although many will have private doubts about always being told the answers in advance by France and Germany. The Mediterranean countries will be excluded from monetary union. Germany has made that explicit in its recent statements. We should be able to rally some support, especially now that the more Euro-sceptic Partido Popular has won more seats that the Socialists in Spain. The Scandanavian countries are also worried by the Union's direction. Sweden has already said it wants its own opt-out from the euro; Denmark would find it difficult to persuade its electorate of the wisdom of going in given the initial referendum result.

The Republic of Ireland is reluctant to join if the UK does not, given the pattern of her trade. The UK should be the policeman of the Maastricht treaty. We should block any move to let Belgium into EMU as her debt levels are well outside the terms of the treaty. The UK should be the political voice of all those Germans who want to keep their DM and all those Frenchmen who think the Maastricht criteria represent a price too high.

We should remind states that the peace has been kept in Europe since 1945 thanks to Nato, which protected the West from danger without, and thanks to the successful democracies protecting us from dangers within. Involving the EU in our defence arrangements could only be disruptive. The neutral states would resent it: surely we are not saying that they must be forced to abandon neutrality? The countries that make an important contribution to Nato would have divided loyalties and confusion of command.

We should be positive. We should set out an agenda to make legislating in the EU much more democratic, involving member states' parliaments and consulting people likely to be affected. We should set Europe's horizons wider, to expand trade and alliances with America and Asia: we face global competition, and we will earn our living in a global market. Our European links and friendships are important, but they must not be allowed to stifle our creativity, free trade and entrepreneurial flair at a time when they will be much needed.

Our vision of Europe with more trade and fewer laws can equip us all for the world of the Internet, multi-media and new technology.

The Franco-German vision is old-fashioned and backward-looking. It will mean higher taxes, more laws and less ability to respond to the challenges of modern life. It will lead to protectionism and to regional and national discontents. It is our duty to stop it and offer something better. We want a Europe that works, not a Europe of the dole queue. A Europe that respects independent traditions, not forces them together. Doing that would merely create a whole load of Quebecs.