Brown: UK won't give up over EU subsidies

THE United Kingdom will not back down in its quest for EU farm subsidy reform, the Chancellor warned Britain's European partners last night.

Delivering a robust Mansion House speech in the City of London, Gordon Brown said that Europe had to face up to the challenges of global competition and not just assume that it could hide from it in an 'outdated' trade bloc.

Brown said that the rejection of the EU constitution in France and the Netherlands meant governments had to change their ways. They had to pay heed to the problem of low economic growth and to take note of people's attachment to their national values, such as what is taxed and by whom, he declared, adding that policies that promoted economic growth and jobs had to become a priority for Europe.

The Chancellor's speech heralds what is likely to be a combative British presidency of the European Union. The Prime Minister Tony Blair is set to deliver a similar message to the European Parliament in Brussels on Thursday where he will call on the EU to implement economic and budgetary reform.

'If the old assumptions about federalism do not match the realities of our time, now more than ever we need a pro-European realism that starts from the founding case for the European Union,' he said, pointing to recent wrangles between Britain and France over farm subsidies as a further example of what was wrong with EU policies

'With 40% of the European union budget spent on agriculture, only 2% of Europe's economy, the budget issue itself is a symptom of an even greater issue about the future of the European economy,' he said.

Brown said that the current trade bloc approach to economic policy would not serve Europe's interests as it struggles to cope with the economic challenge from the Far East. He pointed to China, which has seen a doubling in exports to Europe in the past three years and said that as many as 5m European and American jobs could be outsourced to the region by 2020.

The Conservatives' Shadow Chancellor, George Osborne, however, criticised Brown's speech, declaring that the Chancellor had to practice what he preached and pointed to increased taxation and bureaucracy as a evidence that Labour was stifling innovation.