Tony Blair will declare today that Britain can feel more comfortable about its relationship with continental Europe than at any time in its history as a "new generation" of European leaders unites around the need to pursue economic reform.

In a speech that is highly optimistic about the European Union and Britain's part in it, the prime minister will acknowledge that the EU has been hit by a string of "alarums and excursions" during the past year - on issues such as the EU constitution and the budget - generating real fears about the union's future.