One of Gordon Brown’s closest allies on Wednesday laid the ground for a significant shift in tone over European policy by the UK chancellor of the exchequer and likely successor to Tony Blair, prime minister.

Ed Balls, a junior Treasury minister and former chief economic adviser to Mr Brown, insisted the UK must be “fully engaged” and “pragmatic” in its approach to the European Union. In his first speech since joining the government last month, Mr Balls signalled the chancellor’s growing determination to underscore how the opposition Conservatives’ EU policy under the leadership of David Cameron risked isolating any future Tory-led government he leads.