Blair: "Breaking divides"

The prime minister has said he will not be "complacent" about Labour's economic success.

Delivering a speech in London's Canary Wharf on Thursday, Tony Blair praised London's record as a major financial centre.

"Strong though the economy is today, we can't afford one moment of complacency," he said.

And he set out his party's plans to ensure Britain's economy remains successful.

"The choice cannot be between a big state and a minimalist one; between a return to the high tax levels of the past and chronic underinvestment in the public realm; between an attempt to ward off globalisation through high regulation and a crude adherence to the survival of the fittest," Blair said.

"The whole genesis of New Labour was to break through these divides. The state we need is an enabling one.

"The tax and spending plans we need should correct the underinvestment but should not put at risk the competitive nature of the UK economy."

Red tape

Blair accepted that "there are real concerns about how we get the right regulatory framework here for the future".

He added that "ill-conceived regulation today won't protect jobs".

"But I believe we may have reached a tipping point where new regulations in many areas are self-defeating.

"In the Budget we announced significant reductions in the number of regulators and regulatory burdens, and a much more careful risk-based approach to regulation for the future.

"We are also championing lighter touch regulation in the EU, and will continue to use our influence to the full within the EU to negotiate the opening of markets internationally."

Tax rises

Seeking to keep the general election campaign firmly focused on the economy, Blair hailed Labour as "the party of wealth creation".

The move comes despite a row over potential tax rises in a Labour third term.

The International Monetary Fund and Conservatives have claimed that the government has a black hole in its finances that will need to be filled by higher revenues or lower spending.

However, like Labour, the Tories have failed to rule out raising National Insurance or stealth taxes themselves.

Blair said that Labour is the party most trusted on the economy and best placed to deliver future growth.

He said that Labour "is the party of modern wealth creation and prosperity".

The prime minister added that "I believe that it is New Labour, rather than the Conservatives, which understands the profound challenges facing our economy and society, and has the right policies to foster enterprise and the knowledge economy upon which future wealth creation depends".