Blair kicks off EU presidency with new attack

Tony Blair announced that Britain would use its six months in the EU's rotating presidency, which began yesterday, to review the European "social model" covering workers' rights, labour market flexibility, skills and welfare.

The move threatens further conflict with France and Germany, already at odds with Britain over the EU budget, who claim the British system leaves people to the mercy of the market. They offer a higher level of social protection than Britain, which believes the continental model stifles job-creation and growth. Mr Blair won the backing of the European Commission for the initiative when its members visited London for talks with ministers. The Commission is to produce a paper on the "sustainability of the European model" in the light of globalisation.

Jose Manuel Barroso, the Commission's president, said: "To have an ambitious social model, we need growth. Without growth ... we can't deliver on the expectations of social justice that our citizens have."

Mr Barroso said the EU was about "more than markets". He said it was a mistake to pitch the free market against the social market because "we need both". That was a nod in the direction of the "Nordic model" adopted by nations such as Sweden, which have used high taxes to fund huge investment in education, research and development, sparking healthy economic growth. While labour laws are more flexible, allowing employers to lay off workers more easily than in France or Germany, the jobless are supported through generous welfare payments and encouraged to retrain.

At a joint press conference with Mr Barroso, Mr Blair admitted he was "taking a risk" in raising the social model, but said: "I think it is sensible to do it. Everybody knows that is the debate going on in Europe, so let's have it."

The Prime Minister insisted: "Europe is not just about free trade and it is not just about the economy, but it is no use us trying to compete in the tough, changing world unless we are prepared to make the changes necessary, including not abandoning our social model, but updating it." Mr Blair announced that he is call an informal summit of European leaders this autumn to discuss its future direction following the "no" votes in the French and Dutch referendums on the proposed EU constitution.

He admitted that Britain was taking over the presidency at a "difficult moment" and played down hopes of a breakthrough on the budget crisis before another summit in December. "We will do our best to make progress, to reach agreement. Whether it's possible or not, I really don't know. There is no point in pretending there are not real issues and real difficulties."

Mr Barroso, who said it was a "rough period" for European politics, issued a coded warning to Britain. "No one is going to impose its own point of view on the others," he said. Calling for an urgent agreement on the budget to prevent "paralysis", he added: "Everyone has to move." He also appealed to EU leaders to embrace a "culture of compromise" and avoid "nationalist rhetoric". The message was reinforced by Peter Mandelson, the Trade commissioner and close Blair ally, who said Britain could act as an "honest broker" as long as it did not pursue its own interests rather than the EU's as a whole.

Catherine Colonna, the French European Affairs minister, said Britain had "the responsibility to ... work for the general European interest". She added that Britain's £3bn-a-year rebate remains a "problem".

Britain listed amongst its priorities reform of the Common Agricultural Policy and closer co-operation on counter-terrorism and illegal immigration.