Brown and Blair at odds over new EU constitution

Gordon Brown was at odds with Tony Blair over Europe yesterday after warning that the proposed new EU constitution could pave the way for a common tax and fiscal policy.

Downing Street and Brit- ain's EU partners were taken by surprise when the Chancellor launched an offensive against economic integration when he returned to work after two weeks' paternity leave.

Mr Blair has consistently played down the threat from the new EU constitution but Mr Brown struck a different tone when he flexed his Eurosceptic muscles before a meeting of EU finance ministers in Brussels yesterday. He told BBC Radio 4: "It is very important, in the new constitution, we rule out both tax harmonisation and the idea of a federal fiscal policy, because it bears no relation to the needs of Europe facing global competition."

At a press conference in Brussels, the Chancellor said: "People have to ask themselves why it is Europe has grown so slowly in the last few years and the British economy has grown for every quarter of every year for the last six years."

Number 10 sought to play down the different approaches. Mr Blair's official spokesman said: "We believe there is room for clarification. We are confident our concerns will be met precisely because they are shared by other countries."

Mr Brown pointed out that the European Commission was still pushing to harmonise VAT, which could remove Britain's opt-out from charging VAT on children's clothes and shoes.