"My aim for the next decade for Britain is nothing less than full employment in the next century," Chancellor Brown said in an interview with the Observer newspaper.

But he says this hinges on the government not giving in to demands for extra spending and large pay increases.

"Irresponsibility on pay will lead directly to higher interest rates and fewer jobs. What I am talking about demands responsibility not just on the shopfloor but in the boardroom. " Chancellor Brown said.

Already, unemployment is at a 19-year low of 1.12m, while inflation is at a 36-year historic low. Pressure has increased on the Labour government to relax its spending plans since reports of a £12bn surplus this year began to circulate.

Chancellor Brown dismissed these reports of a Labour "war chest" and said there would be no relaxation of Labour's financial prudence.

He said: "I am not going to make the same mistakes as Nigel Lawson. Sitting in this very same office in 1988, he thought and imagined he had a huge set of revenues that he could spend at will.