PM Tony Blairs speech to EU Parliament

in with the modern world we live in.

If Europe defaulted to Euro scepticism, or if European nations faced with this immense challenge, decide to huddle together, hoping we can avoid globalisation, shrink away from confronting the changes around us, take refuge in the present policies of Europe as if by constantly repeating them, we would by the very act of repetition make them more relevant, then we risk failure. Failure on a grand, strategic, scale. This is not a time to accuse those who want Europe to change of betraying Europe. It is a time to recognise that only by change will Europe recover its strength, its relevance, its idealism and therefore its support amongst the people.

And as ever the people are ahead of the politicians. We always think as a political class that people, unconcerned with the daily obsession of politics, may not understand it, may not see its subtleties and its complexities. But, ultimately, people always see politics more clearly than us. Precisely because they are not daily obsessed with it.

The issue is not about the idea of the European Union. It is about modernisation. It is about policy. It is not a debate about how to abandon Europe but how to make it do what it was set up to do: improve the lives of people. And right now, they aren't convinced. Consider this.

For four years Europe conducted a debate over our new Constitution, two years of it in the Convention. It was a detailed and careful piece of work setting out the new rules to govern a Europe of 25 and in time 27, 28 and more member states. It was endorsed by all Governments. It was supported by all leaders. It was then comprehensively rejected in referendums in two founding Member States, in the case of the Netherlands by over 60 per cent. The reality is that in most Member States it would be hard today to secure a 'yes' for it in a referendum.

There are two possible explanations. One is that people studied the Constitution and disagreed with its precise articles. I doubt that was the basis of the majority 'no'. This was not an issue of bad drafting or specific textual disagreement.

The other explanation is that the Constitution became merely the vehicle for the people to register a wider and deeper discontent with the state of affairs in Europe. I believe this to be the correct analysis.

If so, it is not a crisis of political institutions, it is a crisis of political leadership. People in Europe are posing hard questions to us. They worry about globalisation, job security, about pensions and living standards. They see not just their economy but their society changing around them. Traditional communities are broken up, ethnic patterns change, family life is under strain as families struggle to balance work and home.

We are living through an era of profound upheaval and change. Look at our children and the technology they use and the jobs market they face. The world is unrecognisable from that we experienced as students 20, 30 years ago. When such change occurs, moderate people must give leadership. If they don't, the extremes gain traction on the political process. It happens within a nation. It is happening in Europe now.

Just reflect. The Laeken Declaration which launched the Constitution was designed "to bring Europe closer to the people". Did it? The Lisbon agenda was launched in the year 2000 with the ambition of making Europe "the most competitive place to do business in the world by 2010". We are half way through that period. Has it succeeded?

I have sat through Council Conclusions after Council Conclusions describing how we are "reconnecting Europe to the people". Are we?

It is time to give ourselves a reality check. To receive the wake-up call. The people are blowing the trumpets round the city walls. Are we listening? Have we the political will to go out and meet them so that they regard our leadership as part of the solution not the problem?

That is the context in which the Budget debate should be set. People say: we need the Budget to restore Europe's credibility. Of course we do. But it should be the right Budget. It shouldn't be abstracted from the debate about Europe's crisis. It should be part of the answer to it.

I want to say a word about last Friday's Summit. There have been suggestions that I was not willing to compromise on the UK rebate; that I only raised CAP reform at the last minute; that I expected to renegotiate the CAP on Friday night. In fact I am the only British leader that has ever said I would put the rebate on the table. I never said we should end the CAP now or renegotiate it overnight. Such a position would be absurd. Any change must take account of the legitimate needs of farming communities and happen over time. I have said simply two things: that we cannot agree a new financial perspective that does not at least set out a process that leads to a more rationa

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