LONDON The economy emerged as a key battleground in the British general election campaign Thursday with Labour vaunting its financial competence while the opposition Conservatives promised hefty tax cuts.

Prime Minister Tony Blair told the first press conference of the governing Labour Party's campaign that the economy would be "the defining issue" in the June 7 ballot.

During the second full day of electioneering, Blair sought to capitalize on Labour's economic management, the big success story of his administration's four years in power, AFP reported.

"The defining issue of this election, like any other, is the economy," Blair said.

"Economic credibility means sums that add up, policies for stability, a sense of responsibility in public finances."

He said any party wanting to govern must have a credible plan on interest rates, borrowing and investment, and must avoid the temptation of promising unaffordable tax reductions.

The Conservative manifesto, unveiled Thursday by party leader William Hague, promised a huge eight billion pounds (13 billion euros, $11.5 billion) in tax cuts, much of it stemming from lower duty on fuel.

Blair offered voters a choice between "the targeted, affordable tax cuts we have made or irresponsible tax cuts (proposed by the Tories) that would threaten a return to boom and bust."

The prime minister said at his party's London headquarters there had been "a great historic shift in British politics".

"It is perhaps the most important change of recent years that Labour enters this election as the party of economic competence."

He added: "We have the lowest inflation for 30 years, the lowest long-term interest rates for 35 years."

Meanwhile, Hague was the first of the main party leaders to unveil his manifesto, entitled "Time for Common Sense", which promises reduced state interference in voters' lives and tax cuts for families, businesses, savers and pensioners.

But he insisted that savings would come from cutting bureaucracy and fraud, not front-line services, and committed the Tories to matching Labour's proposed spending on schools, the health service, the police and defense.

The Conservatives, who are trailing badly in the polls, feel taxation is one of their strong points, and accuse Labour of having imposed swingeing "stealth taxes".

Labour dismissed the Tory proposals as unaffordable, claiming they have not been properly cost.

One of the Conservatives' most eye-catching pledges is to reduce fuel duty by six pence a liter. Petrol prices, currently around 78 pence a liter, are among the highest in Europe.

Striking a patriotic note and referring repeatedly to "the country that I love", Hague pledged to keep the pound throughout the next Parliament and to guard against the "steady erosion of Britain's independence" in Europe.

Blair favors Britain joining the European single currency when the economic conditions are right and providing the public votes for the move in a referendum.

The prime minister stressed the point as he later Thursday headed to the heart of England to kick off his general election tour.

"I don't think you could ever take a decision like this unless you actually have the country with you," he told an audience of businessmen at the University of Warwick.

"You need sustainable economic convergence for our membership of the euro to work. That must be there," he added.

He predicted a "much bigger and more sustained debate" on the whole issue after the election.