EUROPE needs to focus on liberalising its economy to boost competitiveness now that political integration has stalled, Latvia’s Economics Minister said yesterday.

In his first British newspaper interview since taking office six months ago, Krisjanis Karins called on European states to focus on opening their markets, telling The Times that liberal economic policies and low business taxes lay behind Latvia’s rapid growth rate.

He urged the European Union to take seriously the Lisbon agenda, its market reform plan to create the world’s most dynamic economy by 2010, and to adopt the services directive which would liberalise the provision of services across the Continent.

He said that the future of the European Constitution was an “open question” as it would not be adopted in the short term.

Mr Karins said: “Now is a time to rethink and often that’s a good time to go back to the basics, and the basics of Europe are about an open common market. Maybe it would be easiest to focus on the Lisbon agenda and to let the issue of the constitution settle.”

Latvia, where corporation tax is now just 15 per cent, is one of the strongest advocates of open markets in EU and is seen as a “new Europe” ally of the UK. Mr Karins, who is visiting Britain to promote Latvian business, said: “If Europe doesn’t enact the reforms that it needs, to open its markets more, there could come a time in the future when economic development for all of Europe could be hampered.”

The Baltic nation of 2.3 million people pegged its currency, the lat, to the euro at the start of this year and will join the single currency in 2008. But while Mr Karins welcomed the euro, he called for Europe to “take a step back” from the European Constitution after its rejection in referendums in France and the Netherlands.

“Whether this document or a similar document will be adopted is an open question,” he said. “It certainly seems that this document in its current form, in the short term at least, will not be adopted.”

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