London Briefing: New Labour has a peculiar relationship with the truth. When faced with uncomfortable facts it becomes a wholly unpredictable beast.

It is always impossible to know which route it will choose: obfuscation or confrontation. The aftermath of the successful conclusion to Europe's constitutional summit provides a perfect example of Tony Blair simply refusing to face up to reality.

He has declared, several times, that this is the end of Europe's federal dream and that we can now go forward with an economic union of sovereign nation states.

That Germany and France are bitterly disappointed over the outcome is not mentioned, nor is the simple fact that they will now seek alternative routes to achieve greater integration.

Perhaps the domestic agenda dictates everything: Blair's insistence that sovereignty is now defined by the ability to set our own taxes is a pretty mean definition of national identity, but it is on such matters that the constitutional referendum will be fought.

For as long as mainstream opinion in France and Germany believes that a federal union is Europe's raison d'etre, people in Britain will suspect Blair's sincerity.

At the same time as the press are giving Blair an extremely hard time over his supposed triumph in Brussels the government has let slip that it is considering telling the truth to the British people over their pensions.

Draft proposals to raise the retirement age to 70 - or to abolish it altogether - have elicited the predictable "work until you drop" headlines in the tabloids.

In the UK, pensions are as sensitive a topic as Europe, with people increasingly assailed by closed company schemes, defrauded company schemes and savings products that turn out to deliver a lot less than promised. All very tricky stuff for a government that consistently chooses expediency over reality. The simple truth is that the cause of the pension "time bomb" is that we are living longer. Hence, the cure - the only one - is to make people work longer.

Given their track record, we would have expected New Labour to dodge this one and take the European line: heads in the sand, keep making pension promises that stand no chance of ever being met.

After all, the bomb will go off on somebody else's watch. Amazingly, we see signs that the government is compelled by simple arithmetic and is, maybe, going to tell us that unless we all work for longer we are going to be poor. Time will tell if the draft proposals make it to the print room, but the fact that they have been leaked suggests that we are being softened up for some tough talking.

Cynics have spotted Gordon Brown's hand in all of this. If the government was brave enough to raise the age at which it starts paying state pensions it would save an awful lot of money. Even if it doesn't go this far, but merely encourages people to work for longer (an end to compulsory retirement at 65) it will collect a lot more in payroll taxes and National Insurance.

A cash-strapped Chancellor, under fire for the long term sustainability of his fiscal stance, would see all of this and start to drool - but people make too much of Brown's difficulties. He might be borrowing a lot but debt levels are so low he can continue to do so for a very long time.

But a pension plan that makes perfect sense and also saves money would be almost too hard to resist. Brown might also be tempted to push Blair to make necessary changes to the retirement rules to avoid having to do it himself when he is prime minister. There might be several such adoptions of unpopular policies over the next few months for similar reasons.

Telling people the truth about their pensions has also extended to comments about the property market. Various agencies have combined in recent weeks to urge people to forget about the idea that a second home will provide an adequate pension. Again, it's all about arithmetic: the average UK house will not provide enough capital or income to make a serious impact on pensions.

This is simply another aspect of the same issue: to retire at 65 or earlier on a significant proportion of your final salary you either have to be lucky, very rich or a civil servant. Or, in the case of Tony Blair, all three.