Conservative leader William Hague will argue that tax cuts, welfare reform to fund them and light business regulation are the key to economic success in the internet age.

Mr Hague is expected to express these views in an address to an international gathering of young conservatives in Florida.

His speech also accuses left-wing governments, including Britain's New Labour administration, of endangering voters' jobs through a continuing addiction to high taxes and heavy regulation.

Mr Hague cites this week's announcement of the £218.7 billion merger between US media giant Time Warner and America Online (AOL), the world's top internet service provider, as a sign-post of the way businesses are developing, and outlines the implications for the way governments manage economies.

One approach to such developments is what Mr Hague calls the "mammoth approach" - a reference to the extinct woolly mammoth - in which governments seek to match the globalisation of business by expanding their own powers.

"That is why we see many left-wing governments, including the British Labour Government, increasing the power of the state by imposing maximum working hours, extending minimum wages and creating costly employment rights.

"We also see welfare systems expanding and taxes going up to pay for them," Mr Hague said.

Global markets

"For left-wing politicians believe only big government with heavy regulation and big welfare programmes can protect small citizens from the cold winds of global markets."

Mr Hague is particularly critical of the EU's working hours directive, warning "regulations such as these don't protect workforces; far from it, they drive businesses away and turn workforces into dole queues."

In contrast, Mr Hague argues for what he calls the "dynamic approach".

That would involve reducing the burden on business of red tape, he believes and says it would also demand welfare reform - and tax reductions.

"Welfare provides no help for working people if the tax cost of maintaining it drives businesses away and destroys jobs," he says.

"Instead, the new economy demands governments take the tough decisions necessary to reform welfare, reduce benefit bills and cut taxes.

'Tax guarantee'

"Reforming welfare allows us to cut taxes - and cutting taxes is absolutely central to the dynamic approach.

"For in the new economy, low taxes are a magnet for business and jobs.

"Countries will compete against each other to offer the most attractive, low tax location for companies.

"A rising tax burden and stealth taxes become millstones that will slowly drag down any economy, however strong."

Mr Hague, addressing the International Democrat Union's second Young Leaders Forum in Punta Gorda, Florida, said the low tax imperative was the reason for the Conservatives' "tax guarantee" - a promise that at the end of the next Conservative government the state would take a smaller share of the nation's income than at the beginning.