The Conservative leader William Hague has launched a strong attack on Prime Minister Tony Blair's performance in Europe.

He took the prime minister to task for what he said were the government's failures to persuade the French the lift the beef ban, and to end uncertainty over a new EU-wide tax on savings.

Referring to the EU summit in Helsinki last weekend Mr Hague told MPs that Mr Blair was the first "British prime minister to return back from a summit both isolated and empty handed".

This, he said, represented "the complete failure of the prime minister's strategy on Europe".

Mr Hague said the prime minister had got nothing in return for "compromising" and "caving-in" on Europe.

The opposition leader also said that proposals for a rapid reaction force agreed at the summit were "dangerous" and would irritate the United States and undermine Nato.

Trade war would be 'folly'

Defending the government's handling of the beef ban, Mr Blair said it had now been lifted in 13 of the 15 nations in the EU, and that the rest of the union was behind the UK's decision to take France to court have the embargo ended.

Mr Blair said that it would have been unwise to raise the issue at the summit and added: "Neither do I think it is sensible to threaten a trade war with France.

"We have trade with France worth billions of pounds. To break the law ourselves, while seeking to have it upheld against France, would be folly. We will not do it."

He said that a formal legal opinion on the French ban on British beef will be issued by the European Commission on Tuesday.

Turning to the issue of the proposed withholding tax the prime minister told MPs: "We will continue to work for a solution to the issue of tax evasion that rightly concerns some of our EU partners, Germany in particular.

"But this cannot be done at the expense of a major European financial market based here in London. I have made it clear we will not permit that."

On defence, the prime minister made it clear that,despite Conservative claims that the new EU rapid reaction force would damage Nato, it would not be deployed when Nato was itself involved in a particular operation.

The prime minister also insisted the EU force was not the first step towards a European army, and it would not duplicate any activities undertaken by Nato.

Turning to the Tories themselves Mr Blair said their positions on Europe were both fatuous and extreme.

Mr Blair said: "If I am isolated - which I am not particularly - but if I am isolated on it [the withholding tax] it is because I am prepared to stand up for this country's interests."