Europe ignores Brown's proposals at its own peril

London Briefing: Gordon Brown, the British chancellor of the exchequer, is not a popular figure in European corridors of power. He has made few friends and has done little to endear himself to Europe's political elites.

In particular, he has driven his counterparts slowly mad with his constant lectures and boasting about how well Britain has been doing since he took office. The superiority of the Gordon Brown model of economic policy making is taken for granted by the chancellor and his acolytes and they have been genuinely bemused by the failure of anybody else to agree with them.

Only the other day, Gerhard Schröder, the outgoing German chancellor stated (again) that "the Anglo Saxon economic model is not for us".

Gordon takes this sort of thing personally, but the message seems to have got through: the chancellor has realised that berating his fellow finance ministers for not doing the obvious can come across as a wee bit arrogant. It doesn't matter if every single one of your arguments is right. It counts for little if all of the facts are on your side.

The problem is partly to do with Gordon himself: most Europeans have decided to disagree with him on principle. I think the euro would be doomed if Mr Brown ever did a volte face and announced that it was a good thing.

The chancellor seems to have absorbed some of this and has, for once, produced a set of policy prescriptions for Europe that contain not an ounce of arrogance nor one iota of "look how much better the UK economy is doing compared to yours". The document, Global Europe: full-employment Europe, available on the treasury's website, is as unusually free of posturing as it is complete with spot-on analysis. It deserves a wide audience, but will almost certainly be ignored.

Brown's central idea represents a difficult pill for Europe to swallow. The world has changed and Europe has failed to keep up. Europe designed a model for economic development that worked very well in the two or three decades following the second World War, but globalisation has rendered many of the old beliefs obsolete.

Brown suggests that Europe has developed by basing everything on internal economic integration, with companies and markets gradually being transformed from national entities to pan-European ones. But the world has moved on and many markets and companies are now truly global.

This creates challenges, according to Brown, that could never have been foreseen by the inventors of the European model. The drive that has seen the creation of the single currency and the single market and aspires to federal fiscal policy and tax harmonisation as the next steps has, at the end of the day, failed to deliver. Too many European countries are falling behind the new, global race. The chancellor meets head on those critics who immediately suspect just another rant about the need for more economic flexibility and calls for more liberal capitalism.

He explicitly argues that globalisation need not spell the end of Europe's social models. But he also cogently argues that "globalisation can be managed well or badly, fairly or unfairly, and we believe that through policies that combine flexibility and fairness, Europe's long-standing social values can be advanced alongside economic prosperity".

The facts are familiar, but are rehearsed by Brown in an uncharacteristically homespun manner. The rise of China is wonderfully illustrated by the simple observation that 70 per cent of the world's photocopiers; 50 per cent of cameras; 40 per cent of microwaves, and 25 per cent of textiles are now made in that country.

If the ability of Asia to compete in low-cost manufacturing is well-known, the next big challenge for Europe is the imminent shift by Asian companies, up the value chain, competing with just about anything produced in Europe. No country is immune, no country can take its future prosperity for granted. "History shows how once confident countries can experience rapid decline,"he states.

While paying close heed to Europe's sensitivities about the "social model", Brown's policy prescriptions will not come as much of a surprise. The completion of the single market is his first, modest proposal. Specific ideas to boost R&D spending look sensible. In many ways, his ideas serve merely to remind Europeans of their own aspirations as expressed in the previously agreed Lisbon Agenda.

It has already been said that nobody will listen to any of this because of the messenger. That would be a pity. Europe's relative economic decline has now been under way not just for a year or two, but for a whole decade.

Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.