PM says Labour is economy champion.(Business) - The Birmingham Post (England)

Byline: John Revill Business Staff

The Prime Minister yesterday declared New Labour is synonymous with business.

During a rare foray into the economic sphere dominated by Chancellor Gordon Brown, Mr Blair said the fundamental elements of the Labour Government's approach to the economy were stability in macroeconomic management, a competitive tax regime, flexibility in labour, capital and product markets and the rejection of protectionism.

He acknowledged that these have traditionally been seen as positions of right-of-centre parties, but said it was now natural for Labour to be the pro-business party.

Mr Blair told his audience of City bankers: 'These basic rules -macro-economic stability, competitive tax rates, flexibility and free trade -are clear.

'Break them and your economy suffers.

'They used to be more naturally associated with right-wing politics. Today, they are part of the agenda of a modern progressive centre-left.

'As Gordon Brown showed last week, it is now axiomatic for New Labour to be pro-stability, pro-business and pro-enterprise.'

Tax as a proportion of GDP had been lower under his administration than in most of Margaret Thatcher's period in office, and remained 'way below' the EU average, he said. He was critical of European 'inflexibility' reflected in Brussels directives on working hours, agency workers and investment services and indicated that the Government would continue to oppose tax harmonisation in Europe.

The Prime Minister said last week's Budget represented a clear unity of purpose across the Government.

'This is the British path to prosperity: to keep our hard-won economic stability but then to add to it, the investment allied to reform in education, science and technology. Not just in our schools, but across our workforce.'

The Prime Minister also pledged to increase Government support for education, science and technology to improve Britain's competitive edge in a ever changing world.

Alongside investment in education and training, backing for science will be the key contribution Government can make to ensuring the UK's long-term economic health, he insisted.

A ten-year programme to be unveiled this summer will guarantee a rising share of gross domestic product (GDP) invested by the Government in science and innovation, he said. Mr Blair said previous governments had a mixed record when it came to research and development.

'Science and technology are no longer optional extras to be cut back in hard times,' said Mr Blair. 'They are the wellsprings of future prosperity.'

Although the UK's macroeconomic stability and flexible labour market had allowed it to close the productivity gap with European competitors, it was facing competition from emerging economic powers.