The European “constitution”, that peculiar mixture of vanity and vacuity, is dead. Yet no one wants to be the first to bury it. Silvio Berlusconi, the Italian Prime Minister, yesterday suggested “a rethink of certain aspects of the European bureaucracy”, but went no further. Britain has been biding its time, reluctant to draw the sting of Jacques Chirac’s wounded pride. This may be tactically wise, given that Britain has a major role to play in deciding what to salvage from the wreckage. But by the time that EU leaders meet at the European Council on June 16, they must acknowledge that it is over.

There is now a huge opportunity, as Britain assumes the EU presidency, to argue for a wider, freer Europe. The French “non” has increased British influence, even though it will also harden the French position against “Anglo-Saxon” liberalisation. In Germany, a change of leadership looks likely in September that could weaken the French still further.

Mr Blair has a difficult hand to play. He will need all his powers of statesmanship to pull something positive together. But even in Brussels, many are now beginning to accept that Europe cannot continue to widen and deepen at the same time. And the expansion of Europe provides new alliances in support of a freer, less regulated Europe. Only yesterday the UK Institute of Directors and the Confederation of Polish Employers jointly rejected the European Parliament's revised proposals for working time, arguing that these would damage competitiveness.

What kind of Europe should Mr Blair fight for? In the coming year it will be time to jettison Jean Monnet’s top-down vision of a single political identity for the continent. In its place there is a compelling case to make for a Europe that can compete economically with China and India, a Europe that gets on with completing the momentous task of creating a genuine single market in goods, services and capital. That means focusing on the Lisbon agenda rather than distracting itself with forays into areas as diverse as foreign policy and criminal justice.

The Dutch referendum result was in part an expression of anger at increasing centralisation in Brussels. Frits Bolkestein, a Dutch former commissioner, says that “the error that is steadfastly made is that because a cause is worthy it must be done by Brussels”. The focus now needs to be on agreeing limits, not pushing new boundaries.

The Government should allow the momentum of enlargement to run its course. This means proceeding with the accession of Romania and Bulgaria and continuing talks with Turkey. It must also decide what to salvage from the constitution. An EU of 25 states, expanding to 27 in 2007, needs clarity and simplicity to be workable. The “double-majority” voting rules, which would let decisions be taken by a majority of states and citizens, are simpler and fairer than the current ones. Cutting down the number of commissioners would also streamline decision-making and reduce the number of competing egos.

Abroad, there is clearly everything to play for. At home, there is no point in holding a British referendum on a dead treaty. Once the Government has cancelled the referendum it must also pledge that it will not bring in the constitution by the back door, but rather forge a new vision for what Europe could be: larger, freer, and hence stronger. In this case, less really can be more.