Labour says euro choice is clear: Join or miss out

Labour will endorse its most pro-European policy statement today, which argues that joining the single currency would give Britain more power on the world stage.

The document, leaked to The Independent, says: "Britain's future is inextricably linked with Europe. To get the best out of Europe, Labour believes we must make the most of our strength and influence within it; and that to do so, we must be whole-hearted, not half-hearted partners in Europe."

It reiterates the Government's policy that the decision on the euro must be based on "whether the economic case for joining is clear and unambiguous". But the direction of the party's new stance is clear: it says the "simple choice" facing Britain is "being at the heart of the EU" or "standing on the sidelines".

The paper adds: "In or out, the success of the single market and euro is, and will remain, of central importance to Britain's prosperity, as well as Britain and Europe's capacity for influence in the world."

The report, drafted by a policy commission co-chaired by Jack Straw, the Foreign Secretary, will be discussed by Labour's national policy forum today. Setting out Tony Blair's agenda for the forthcoming review of the EU's governing treaty, the statement suggests national parliaments could be given a formal role within the EU and the influence of governments could be enhanced.

The report argues that the new "interdependent" world since the 11 September terrorist attacks strengthens the case for further integration in Europe, including on foreign policy. "We recognise the choice we face between an inward-looking chauvinism that leads to isolation and a modern patriotism where Britain's national interest is pursued through international co- operation," the document says.

The report calls for a fundamental rethink of Britain's armed forces to cope with the new terrorist threat and suggests that defence spending may have to rise. It says: "Acceptance of international responsibilities does not come cheap. Are we prepared to see increases in defence expenditure to achieve security at home and abroad, as well as providing the resources needed for our armed forces to carry out these vital tasks?"

In a move that will be opposed by Labour left-wingers, the paper argues that President George Bush's controversial "Son of Star Wars" project could help to prevent further terrorist outrages.

The Labour document says there is now "a real possibility" that determined terrorists could get their hands on advanced conventional weapons or even nuclear, chemical and biological weapons. "There is no single way to tackle these security threats. What should be the balance between international treaties and codes of conduct, and defensive measures such as missile defence in countering such threats?"

One senior Labour figure, unhappy at the apparent endorsement of the Bush plan, said yesterday: "September 11 was the clearest argument yet against national missile defence being able to protect anyone against anything. Now we seem to be suggesting that Fylingdales [the early warning station in North Yorkshire] will direct US interceptor missiles at the next suicidal fanatic who gets on a plane with Stanley knives or Semtex-stuffed shoes, or releases anthrax into the London Underground."