Destiny: Blair

Britain's future lies in further integration with our European partners, Tony Blair said on Tuesday.

In a speech to the SPD congress in Germany, the prime minister said he wanted to create "a stronger more effective European Union".

Speaking about the single currency, Blair delivered a positive assessment of British membership. He said its success was "critical for us all".

"Britain under new Labour leadership wants to be a full partner with Germany and others in the development, this is our true destiny," he said.

"On the euro, if the economic tests are met, whose assessment will be complete within two years of the start of the parliament, we are committed to holding a referendum and joining the single currency."

He said there would be positive spin-offs from greater political integration.

"The political dimension of the European Union remained a difficult issue for many British governments until Labour was elected in 1997. Let me be clear: New Labour has no hesitation in viewing the development of European co-operation and integration as having major political benefits," said Blair.

He argued that Europe would achieve more if it pooled resources. "A Europe that is united can achieve far more as a force for good in the world than any member state on its own," he said.

Provoking anger from the Conservatives, Blair said the common European army had a major part to play in an enlarged Europe.

"We need also more than ever a meaningful European security and defence identity, fully compatible with NATO but able to act where the Americans decide not to be involved but where Europe has a clear responsibility," he said.

The shadow defence secretary, Bernard Jenkin, said: "The prime minister's speech reflects a drama that is completely divorced from the reality of European and global security. Europe's common defence policy is a recipe for stagnation and indecision. Its military capabilities remain mythical.

"The EU has a different agenda from the United States and the only plausible reason for creating an EU army is to make that split a reality. NATO already provides for separable but not separate European forces."