'Euro is a turning point' - Blair

The summit could be overshadowed by the question of German funding

Tony Blair has given his clearest show of support yet for the euro in his opening address to the Cardiff summit.

He described Europe and the United States as the "two pillars of stability" left in a changing world and said the task now was to match America's economic growth.

Tony Blair: Europe is a "pillar of stability"

He told EU leaders: "Our task is to lay the basis for a long period of expansion which the US has just enjoyed.

"The decision to launch the single currency is the first step and marks the turning point for Europe, marks stability and growth and is crucial to high levels of growth and employment."

But the EU leaders assembled in Cardiff admitted Europe had become remote from the people.

The 15 leaders of member states agreed to hold a special summit in Vienna in the autumn to attempt to make their decisions relevant.

German funding row

Mr Blair could still be in for a rough ride during the summit marking the end of the UK's presidency.

A row over German funding has blown up with German Chancellor Helmut Kohl asking for a lower EU subsidy.

Germany currently pays around 30% of the EU's budget. With an election in the offing, Mr Kohl wants a discount similar to the one won by Britain in 1984.

But Mr Blair said a forthcoming rearrangement of all EU finances meant Germany's move would get little support.

European Commission President Jacques Santer appeared to suggest that Britain's rebate could be thrown into the melting pot if the funding debate was opened up.

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Mr Santer said the EU now had to settle its financial framework for "all our policies", including the costs of EU enlargement.

Hague: 'Lack of substance'

Tory leader William Hague has attacked the UK's six-month presidency of the EU.

He said the period had "certainly has not lived up to its expectations".

He argued: "On so many subjects, we've seen a lot of talk and a lot of presentation but not much actual substance."

But Mr Blair said the row over the presidency of the ECB was a disagreement between France and Holland, which was "nothing whatever" to do with Britain.

There had been "huge progress" in completing the single market and reform of the Common Agricultural Policy and he rejected a suggestion that his government was prevaricating over the issue of whether Britain would join the single currency.