For the past 50 years Britain’s engagement with Europe has been constrained by a sterile debate between two opposing schools of thought.

On one hand, some pro-Europeans have traditionally advocated closer union as the sole solution to what they saw as Britain’s declining influence and wealth, policy paralysis and apparent ungovernability. For this view, British attempts to argue for reform in Europe, to oppose savings tax harmonisation or to stay out of the euro have often been seen as betrayals of the European idea.

On the other, anti-Europeans have argued that the very definition of Britishness lies in rejecting anything put forward by the EU. Forged in opposition to the idea that a European federation was the only and inevitable next step for Britain, this view reflected similar assumptions about British weakness.

So for successive British prime ministers the negotiating challenge in the run-up to a European Council has been either to agree – and be accused of selling out the national interest in the view of the anti-Europeans; or to say “no”, often in isolation, and sell out the European ideal.

To me this old ideological debate about Britain in Europe seems increasingly out of place and time. While in 1997, Britain was bottom of the G7, including its European counterparts, for national income per head, today Britain is second only to the USA. That Britain is in inevitable decline and needs Europe as its salvation now looks absurd.

At the same time, the nature of the European project has changed and continues to change. The new member states have already begun to shift the centre of European debate, bringing a liberal approach, which emphasises openness and the importance of cooperation between sovereign countries.

The old assumption that economic cooperation would inevitably lead to political integration, from single market to single currency, tax harmonisation and a European state seems removed from reality of modern Europe today. Many of our European partners join us in pressing for more intergovernmental cooperation and reform of Europe’s budget and institutions rather than further centralisation and European state-building.

I believe we can break out of this outdated and sterile debate, as I argue in my report for the Centre for European Reform, but only if we develop a more confident vision of Europe, and a more hardheaded view of the UK’s place in it, based squarely on advancing our national interest and the EU public interest together.

Britain needs Europe – for securing rising employment and sustained growth while confronting climate change, protectionism and terrorism. This requires effective cooperation with our partners in the EU and reform of its institutions.

To meet these challenges Europe must change. We need a new economic focus on job creation and single-market reform, a radical reform of the EU budget and an end to backward-looking attempts at European state-building.

Here in Britain, I want to make the case for a hardheaded pro-Europeanism.

Pro-European, because we recognise that we are stronger by cooperating with our partners. Hardheaded because we have the confidence to put our national interest first, to say “no” sometimes and to argue our case where we believe Europe risks taking the wrong course.

On financial services, on competition policy, on the environment, on the common agricultural policy and the EU budget – our challenge is to create an outward-facing, flexible Europe. Our approach should be to engage to advance the British and European public interest where we can – while standing firm where our national interests would be damaged.

And in the debate on European institutional reform, it is essential that we also take a hardheaded approach. We must not return to the old ideological assumption that being pro-European means moving inevitably towards European political integration, regardless of the opposition of national populations.

Public support for Europe has ebbed in recent years, with slow economic growth, high unemployment, budget problems and the rejection of the 2004 constitutional treaty making Europe seem stagnant and out of touch. A European state is not the answer. We do not need a constitutional treaty that fundamentally changes the relationship between member states and the EU.

And so in the discussion of institutional reforms in the weeks ahead we should always start with this test – will reform help us make better decisions that address the task of delivering opportunity, fairness and prosperity to all our citizens?

Defending our wider national interest means being at the table and winning the arguments. We will not succeed by following the path proposed by Conservative leader David Cameron and withdrawing to the extreme and antiEuropean fringe.

The only way to get the best deal for Britain is by working together with our partners in the EU, and not being afraid to stand up for Britain’s interests. We can only do so if we reframe the British debate. Most people of our generation reject the old false choice between Britain and Europe. Instead, in 2007 the sensible mainstream view is pro-British and pro-European.

Ed Balls MP is economic secretary to the Treasury. His report, Britain and Europe – A City Minister’s Perspective, is published by the Centre for European Reform

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