'Technology is the key to prosperity'

Prime Minister Tony Blair has promised significant increases in Government support for science and technology to give Britain a competitive edge in an increasingly globalised world economy.

Alongside investment in education and training, backing for science will be the key contribution Government can make to ensuring the UK's long-term economic health, he told an audience in the City of London.

A 10-year programme to be unveiled this summer will guarantee a rising share of gross domestic product (GDP) invested by the Government in science and innovation, he said.

"Science and technology are no longer optional extras to be cut back in hard times," said Mr Blair. "They are the wellsprings of future prosperity."

Although the UK's macroeconomic stability and flexible labour market had allowed it to close the productivity gap with European competitors such as Germany and France, it was facing increasing competition from emerging economic powers such as India and China, he said.

The need to compete in a globalised world economy in which high-technology industries accounted for 25% of world trade gave added urgency to the reform agenda facing the country.

In his most high-profile economic speech for some time, Mr Blair hailed last week's Budget by Chancellor Gordon Brown for its emphasis on the need to invest in education, skills and science.

Funding for education will have risen from 4.7% of GDP in 1997 to 5.7% by the end of 2008, bringing Britain from one of the lowest spenders on education in the EU to one of the highest, he said.

"Last week's Budget demonstrated the clear unity of purpose across Government," said Mr Blair.

"This is the British path to prosperity: to keep our hard-won economic stability but then to add to it the investment allied to reform in education, science and technology, not just in our schools but across our workforce, that is the best guarantor of opportunity and stability in a changing world. Take this path and Britain can be the most competitive and successful economy of its size in the world."

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