Gordon Brown has set out his 10-year vision for Britain and told the Cabinet further reforms are needed to prevent the nation falling behind in the global economy.
The Chancellor, who believes the three main challenges facing Britain are globalisation, security and the environment, tried to dispel fears he would be a "control freak" Prime Minister by asking cabinet colleagues to come up with proposals to safeguard the country's economy.
The Cabinet's hour-long discussion came the day after Tony Blair made clear in the Commons that he sees Mr Brown as his inevitable successor when he stands down next year. In an off-the-cuff remark, the Prime Minister told David Cameron he was a "flyweight" who would be knocked out by the "big clunking fists" of his "heavyweight" successor at the next election.
Yesterday Hazel Blears, the Labour chairman, told BBC2's Daily Politics programme: "He was talking about the Chancellor of the Exchequer, Gordon Brown, in terms of the economy and the strength that we've got from all the policies that Gordon has been enacting over the last 10 years."
Mr Blair refused to confirm publicly that he had anointed Mr Brown as his favoured successor. It is believed that he had intended to do so at a later stage, possibly when he announces his departure date, but jumped the gun during heated Commons exchanges with Mr Cameron.
"I've decided to say nothing more about it," Mr Blair said in a question-and-answer session with the public which was broadcast on the Downing Street website. "People will always interpret these things, but I think I have said all I want to say on it for the moment."
The Prime Minister's unexpected Commons remark upset hardline Blairites who have still not given up hope that John Reid, the Home Secretary, will challenge Mr Brown for the leadership.
Yesterday, they insisted Mr Reid was a "heavyweight fighter", adding that some Labour MPs doubted that Mr Brown would be an inclusive prime minister who would win the next general election.
Amid jokes about boxing, the Chancellor tried to convince cabinet colleagues he would include them fully in the decision-making process as he made his presentation on the economy during what was described as a "very positive" session.
He hinted that he would address the crucial long-term challenges for the UK in his pre-Budget report on 6 December, including climate change, skills, science, transport and planning.
Mr Brown said China, India and Brazil would continue to drive world growth, their share of global gross domestic product rising to over a quarter by 2015. There would be increased specialisation in the production of goods and services, with 40 per cent of the world's microwave ovens already produced in one Chinese factory.
The Chancellor was confident that Britain's strengths - science, innovation, the creative industries, financial and business services, meant that it was well placed to benefit from the changes in the global market.
"The challenge for all developed countries will be ensuring they build on these strengths and that their economies are flexible and responsive," he said. "The rest of the world will not stand still. India and China are investing increasing resources in research and development and education."
Mr Brown emphasised the need for progress towards a world trade deal to avoid "a slide backwards into protectionism" which would be harmful to all nations. At home, he said, the Government would give priority to tackling child poverty and ensuring that every region grew successfully.Reuse content