Gordon Brown has renewed his call for the European Union to press ahead with key economic reforms.

Echoing comments made earlier this week, the chancellor told his Mansion House audience that the recent global downturn showed that Britain was right to emphasise the need for economic stability.

The City audience also heard calls for non-protectionist trading relationships and flexible economies to promote sustained growth.

"And it is right to apply the lessons not just with economic reform in Britain but with economic reform also in Europe," said Brown.

He said it was in the UK's interests for the economic reform agenda to be developed "not just for ourselves but for the rest of Europe with which we trade so much".

"In other words, there is a British national interest in a Europe that - like Britain - learns these lessons from the world downturn and does more to promote stability and growth, is more open to global trade and becomes more flexible," Brown said.

The chancellor said the old debate about "fortress Europe" had been left behind.

"The issue in 2003 is no longer how a single trade bloc organises its internal markets and harmonises taxes, independent of the rest of the world, but how all of Europe, thinking globally, can meet the challenge of global competition," he said.

The chancellor also called for an outward-looking and liberalised European economy.

"At no point in our long history has Britain ever been prepared to relinquish our responsibility and interest in Europe's future," he said.

"But what is new, I believe, is that we can show that the enlarged Europe is changing and will change in line with the values - economic stability, free trade, liberalisation - that Britain holds important; and that, in this way, Britain can be a leader in Europe as Europe equips itself for the challenges of globalisation."

He said the success of the single market would not require tax harmonisation or "centrally imposed one-size-fits-all regulations".

"Instead, building on minimum agreed standards and learning from the USA single currency area, tax competition and the mutual recognition of each other's standards is the best way forward for Europe," Brown argued.

"I am pleased to say that here federalist ambitions are giving way to inter-governmental realities and, throughout the convention discussions, Tony Blair and I have insisted that we rule out tax harmonisation and embrace tax competition."

The chancellor also claimed that British values were making make a "distinctive contribution" to the development of Europe - a change that would have an impact on public opinion in the UK.

"I believe we can bring to an end the old anti-European prejudices that arose from the inward looking trade bloc of the past and as the great debate on Europe's future begins, we can build a pro European consensus around a Britain leading reform in Europe and a reformed Europe playing its full part in the world," Brown said.

"A Britain and Europe more flexible, more outward looking, better equipped to meet the challenges of the global economy that lie ahead."