London ? In a speech to the European Parliament, British Prime Minister Tony Blair said Thursday that the European Union must modernize or face failure.

His address, setting out Britain’s priorities for its six-month presidency of the EU beginning July 1, came a week after a contentious summit, which ended in deadlock because of a disagreement between Britain and France over budget reforms. Britain refused to back down on its claim to an annual rebate on its contributions to the EU. France declined to discuss any change to the sizable subsidies the EU pays European farmers.

Blair was scolded by French President Jacques Chirac and German Chancellor Gerhard Schroeder, and was blamed by the outgoing EU president, Luxembourg’s prime minister Jean-Claude Juncker, for the failure of the summit.

“This is not a time to accuse those who want Europe to change of betraying Europe,” said Blair, who was both applauded and heckled during the speech in Brussels, Belgium. “It is a time to recognize that only by change will Europe recover its strength.”

He pointed to Europe’s falling productivity, lack of investment in research and development and low numbers of university science graduates in contrast to growth in all of those sectors by Asian countries, particularly India and China.

At the same time, he said, there are 20 million unemployed in Europe.

In a swipe at France, he said that, in a modernized Europe, the EU would not spend 40 percent of its budget to support its agricultural policy.

The failure to reach agreement on a European constitution, which was recently rejected in referendums in France and the Netherlands, is a sign of discontent among voters concerned with effects of globalization, job security, pensions and living standards, Blair said.