Thatcher says Britain must renegotiate EU membership

Baroness Thatcher has described the European Union as the "greatest folly of the modern era" and called for a "fundamental renegotiation" of Britain's links with the EU.

She stopped short of calling for withdrawal but insisted Britain should pull out of common agricultural, fisheries, foreign and defence policies. Lady Thatcher, who has become an increasingly vocal critic of Europe, made her comments in a new book, likely to reignite the Conservative row over Europe at a time when Iain Duncan Smith has attempted to shift the focus to domestic issues.

The new Tory leader, known to be a long-time supporter of Lady Thatcher, is likely to face calls from Labour to repudiate her views, while pro-European groups will seize on the book to claim her views reflect true Conservative policy. In the book, Statecraft, serialised in The Times, Lady Thatcher even suggests Britain should join the North American Free Trade Agreement.

She describes the European Union as "fundamentally unreformable" and argues that its creation will ultimately be regarded as "perhaps the greatest folly of the modern era".

Britain's membership is described in turn as "a political error of historic magnitude". Lady Thatcher argues for a wholesale reassessment of Britain's involvement in the EU. She writes: "The preliminary step, I believe, should be for an incoming Conservative government to declare publicly that it seeks fundamental renegotiation of Britain's terms of EU membership."

But the book insists that such a policy need not result in British departure from the EU, which "needs us more than we need them".

Instead, Lady Thatcher argues that Britain's status as the world's fourth largest economy, combined with its strategic importance and strong links with Europe, means that the EU "will need co-operative relations with Britain."

A Conservative Party spokesman said: "Naturally, relations between Mr Duncan Smith and Lady Thatcher are close and cordial, and she has done us the courtesy of sending an advance copy of the book. We will not comment directly on the book, but we will read it with interest."