Howard urges US economy for UK

Howard would be delighted to win Sun's support

Tory leader Michael Howard has said Britain needs a US-style economy, in a speech to a conference of Rupert Murdoch's journalists in Mexico.

"Our economy needs to become more like America's again," he said, as he called for fewer regulations and lower taxes.

He also told British, US and Australian bosses of News International he backed Tony Blair in the war on terror.

His speech was the first by a British politician to News International since Tony Blair addressed them in 1995.

'Wrong path'

Mr Howard evoked the memory of ex-Conservative premier Margaret Thatcher, saying her reforms had "transformed the British economy" and he warned her legacy was being undermined.

America has created the most successful form of capitalism in the free world... it should set an example to us all Is the Sun to smile on Howard?

He said: "Britain is following the wrong path. Business is becoming less competitive.

"We must get a grip on public spending, cut back on waste, reduce regulation and cut taxes."

Mr Howard accused Chancellor Gordon Brown of favouring a European-style economic model of heavy regulation and high taxes rather than what he said was a more flexible and competitive US-style capitalism.

The Conservative leader stopped short of committing himself to specific tax cuts if he comes to power.

But he said Conservative plans to cut regulation and waste and reduce the rate of growth in public spending would "get us to a position where we can actually start to reduce taxes".

Labour policies would "inevitably" mean tax rises if it won a third term, he claimed and contrasted the average 41% tax burden in the European Union with America's 28.9%.

"America has created the most successful form of capitalism in the free world, and so it should set an example to us all," he said.

Free enterprise

Mr Howard stressed his eurosceptic credentials, his opposition to a European super-state, and his commitment to free enterprise and free trade.

Murdoch's backing was a bonus for Labour in the 2001 election

Labour has said it is relaxed about Mr Howard's presence at the meeting, where former Downing Street media chief Alastair Campbell was also scheduled to speak.

But the meeting came after Mr Murdoch publicly declared that the Sun, Britain's biggest selling daily tabloid, might be willing to back Mr Howard at the next election.

The media proprietor told BBC Two's Newsnight in November the Sun would examine whether the Tories "looked like a viable alternative government".

But he said the newspaper would not forget Mr Blair's "courage in the international sphere".

Labour MPs loyal to the government have played down reports that the invitation to Mr Howard appearance in Cancun had caused alarm within the party.