AHEAD of the European Summit in Brussels before Christmas the knives are out for Tony Blair over the EU's budget.

He is under fire for refusing to put Britain's budget rebate on the negotiating table, unless it is part of a much wider budget reform, including the Common Agricultural Policy (CAP).

By simply concentrating on the British rebate, many are ignoring the real crisis now gripping Europe.

Faced with 20 million jobless, an ageing population, terrorism, racial tension and global competition, it would be folly for Europe to try and muddle through.

Instead, it needs to confront those challenges.

The economy is the key to future success.

Our citizens need jobs and economic security for their families.

In a global market, Europe's economy must be able to adapt quickly to change. At present, it largely fails this test.

That's what should underpin the debate over the EU's future finances. Our current budget reflects the priorities of 1955 rather than 2005

Over 40 per cent still goes to agriculture, even though it only accounts for a mere three per cent of Europe's economy.

President Chirac has so far refused to budge on the CAP. But now a chink of light has just appeared with a deal to radically reform the EU's 40-year-old sugar regime.

If they can do that on sugar, why not on the rest of agriculture spending?

Naturally, we would all like to see the budget issue settled at the Brussels Summit. But, ultimately, agreeing an unreformed budget could pose a greater danger to Europe's long term future than not agreeing one at all.

GARY TITLEY MEP, Labour North West.