EUROPE Centre Left leaders want Europe to endorse their radical economic reforms, Philip Webster reports
Blair and Schröder unite on hardline spending cuts
LOWER taxes and stringent controls on public spending will be proposed by Tony Blair and Gerhard Schröder today in a radical joint call for economic reform across Europe.
In a report drawn up over several months by ministers and officials in the British and German Governments, the Prime Minister and German Chancellor will call on centre-left parties across Europe to modernise through reforming the welfare state, adopting flexible labour markets and taking an overtly pro-business stance to policymaking.
Having the same job for life is a thing of the past, The Way Forward for Europe's Social Democrats says in a demand for European economies to change. Social conscience cannot be measured by the level of public spending, it adds. It will be published at Labour's Millbank headquarters and is certain to be hailed as the most significant advance yet in the new Anglo-German alliance forged after the election of Herr Schröder last autumn . It brings together Mr Blair's Third Way approach and Herr Schröder's New Centre but is much more of a new Labour document than was likely before the departure in March from the German Government of Oskar Lafontaine, the Finance Minister. The document contains hardline language on public expenditure unthinkable from left-wing governments only a few years ago. It says both Labour and the German Social Democrats paid the price of failing to develop new answers to changes in society.
The means of achieving social justice became identified with ever-higher levels of public spending, regardless of what they achieved or the impact on competitiveness. The document then states: "The real test for society is how effectively this expenditure is used and how much it enabled people to help themselves."
Mr Blair is understood to be pleased by the document's tone on economic reform, which he believes essential to changing public attitudes to the European Union. It says social democrats must accommodate growing demands for flexibility - and at the same time maintain minimum social standards, help families to cope with change and open up fresh opportunities for those who cannot keep pace.
It suggests that public expenditure as a proportion of GDP in most European countries "has more or less reached the limits of acceptability". The two leaders say modern social democrats recognise that in the right circumstances, tax reform and tax cuts can play a critical part in meeting wider social objectives.
They are expected to announce today that they intend to build up their alliance, holding more ministerial contacts.