Hague: 'Last chance to save pound'

Mr Hague criticised Blair's Third Way politics

William Hague has reconfirmed his determination to make the euro a key election battleground and promised to offer the "most exciting Conservative agenda for a generation".

We will spend only what the nation can afford

William Hague

The Tory leader said the general election expected in May would be one of the last opportunities for Britain to save the pound.

In a speech in London, Mr Hague said his party's manifesto, which will include proposals for targeted tax cuts and less regulation, would show "the failure" of Prime Minister Tony Blair's "Third Way".

"The British Conservative Party believes that Britain's economic interests are best served by keeping the pound," he said.

"At the forthcoming general election, we shall be arguing strongly the case for keeping the pound."

But he added: "We remain fully committed to European co-operation and to Britain's full-hearted membership of the European Union."

'Stealth taxes'

Mr Hague emphasised the Tories' key line of attack on tax: tax cuts would be targeted at those who "have been hit hardest by Labour's stealth taxes".

Friedrich Merz said the CDU and Tories would work closer together

These include families, businesses, savers and pensioners, he said.

The Tory leader added that investment in public services would be linked to the performance of the economy.

"We will spend only what the nation can afford. So we will increase public spending year on year in real terms, but we will only do so within the trend growth rate of the economy as a whole."

Mr Hague was speaking at a conference organised by the centre-right Social Market Foundation think tank.

The conference was held to coincide with the publication of a pamphlet jointly put out by the Conservative Party and Germany's Christian Democrat Union.

Mr Hague said the pamphlet, on liberty and responsibility, "underlines the close relationship that exists at all levels between the British Conservative Party and the CDU".

Third way under fire

The Conservative leader used his speech to attack Mr Blair's "Third Way" politics, dismissing the approach as "a monumental fraud".

"I believe it is becoming clearer than ever that the Third Way has been a monumental fraud," said Mr Hague.

"It is what Tony Blair's chief polling adviser famously described in a leaked memorandum last year as a 'brand'.

"And like every brand it relies for its appeal on a combination of gimmicks and packaging."

He added: "They have failed to live up to the extravagant promises and expectations. They are all spin and no delivery."

The conference was also addressed by CDU leader Friedrich Merz.

Mr Merz described the publication of the pamphlet as the beginning of a new era of co-operation between the two sister parties.

Labour has attacked the Tories' spending plans as "sums [which] still don't add up".