Mr Brown has criticised EU inflexibility

The appeal for Europe to be more outward looking came in a speech to business leaders in London.

Ahead of the speech, former cabinet minister Peter Mandelson suggested the chancellor was a political obsessive who had "outmanoeuvred" Tony Blair over the euro.

The Conservatives immediately seized on the comments from Mr Mandelson, a close confidante of the prime minister, who also argued the UK would pay an "incalculable price" for staying out of the euro.

Mr Brown and Mr Blair are continuing to consult individual cabinet ministers about joining the euro.

A more self-confident Britain and a more self-confident Europe can be an engine for economic and social progress on the global stage Gordon Brown Chancellor of the Exchequer EU constitution talks Cabinet euro meetings

The chancellor is expected to announce next month that Britain has yet to pass his five economic tests for membership of the European single currency.

But Mr Mandelson's words show debate is intensifying on when the government will call a referendum on the subject.

The strongly pro-euro Mr Mandelson told a journalists' lunch: "Gordon Brown is a politician right down to his fingerprints, 24 hours a day, seven days a week.

"Tony is not. If he was as obsessed with politics he would not have let himself be out-manoeuvred by chancellor in the way that he potentially has."

The former minister argued the "New Labour project" would be damaged by failing to adopt the euro.

Stability stress

In Tuesday's speech, Mr Brown argued against making euro decisions "on dogma, not economics" and stressed the primacy of his five economic tests.

Joining the euro could bring "clear benefits" in trade, investment and growth, he said.

"But I also know that to repeat the ERM mistake and take risks with stability is not in the national interest," he continued.

Mandelson suggested Blair was losing the euro battle

Mr Brown said Europe had a new economic task, which was to forge a global role for itself by offering a flexible labour market.

Mr Brown said: "Britain is part of Europe by history, by geography, and by economics.

"And I believe that Britain can be a leader in Europe as Europe equips itself for the challenge of globalisation."

But economic reform was needed before Britain could step into that role, he warned, and building a new pro-European consensus in Britain was both essential and possible.

"In this new era where Europe is now seeing that it must not be an inward looking trade bloc but part of the global economy, we can, I believe, persuade the British people not just to half-hearted acquiescence in Europe but a whole-hearted engagement with Europe."

'Social justice'

He added: "Put simply, a more self-confident Britain and a more self-confident Europe can become an engine for economic and social progress on the global stage - not as a rival to the USA or other trade blocs but as a partner."

That would be proof that economic success and social justice could advance together.

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Conservative shadow chancellor Michael Howard leapt on Mr Mandelson's comments as evidence of the "vicious and personal infighting" between the premier and his chancellor on the euro.

"It is quite clear that the fudged decision Gordon Brown makes on June 9 is going to be dictated by Labour's infighting, not what is best for Britain," said Mr Howard.

Echoing that view, Liberal Democrat Treasury spokesman Matthew Taylor said: "Peter Mandelson has exposed the growing divisions at the heart of the Labour Party over Europe, which is becoming a test of Old Labour versus New; chancellor versus prime minister."

Meanwhile, CBI chief Sir John Egan is using the dinner to complain that delivery is simply not matching investment when it comes to public services.

"From transport to health services and local government, we are not getting bang for our hard-earned bucks," he said.

Earlier, the CBI boss told BBC Radio 4's Today programme that government was spending about 7% more money but that had only netted a 2% increase in output.