By William James
LONDON (Reuters) - The two contenders to win Britain's national election next year traded blows over their business policies on Wednesday after finance minister George Osborne accused the opposition Labor party of "pulling up the drawbridge" on foreign investment.
Labor said Osborne was guilty of hypocrisy, arguing that his own Conservative party's promise to hold a referendum on Britain's membership of the European Union by the end of 2017 was spooking business by raising the prospect of a "Brexit".
The clash reflects an emerging trend. With only a few percentage points separating the two parties in the opinion polls, both are trying to persuade the business community that they have the better policies for the economy.
Osborne, in a speech at the Confederation of British Industry later on Wednesday, will say Britain's economy is recovering, but that his decade-long plan to fix it is less than half-completed.
His speech, which his office previewed to reporters, comes on the eve of elections to the European Parliament and takes aim at both Labor and the UK Independence Party (UKIP), which wants Britain to leave the European Union.
"Political parties on the left and the populist right have this in common: they want to pull up the drawbridge and shut Britain off from the world," Osborne will say, according to extracts of his speech.
"It takes advantage of the understandable anxieties of a population unsettled by the pace of globalization, and peddles a myth that Britain can stop the world and get off."
Labor rejected that, pointing the finger back at the Conservatives, arguing that their plan to hold a referendum on leaving the European Union if they win next year's election was causing huge uncertainty.
"The biggest threat to British business would be walking away from our biggest market - the European Union," said Labor spokesman Chris Leslie.
The two parties' contrasting approaches to business were highlighted when drugmaker Pfizer bid to take over British-based pharmaceutical company AstraZeneca, a deal the latter has so far rejected.
Labor said it might block the tie-up on the grounds of national interest if it were in power, and accused the government of cheerleading for a takeover that could result in job losses and facility closures.
The government denied that, saying its stance was neutral and that it wanted assurances over jobs and research.
The disagreement underlined a burgeoning political debate over how government should handle big business, and comes ahead of an election where polls show that perceptions of economic competence will be a crucial factor in deciding how the public cast their vote.
Labor argues that the Conservatives, along with their junior coalition partners the Liberal Democrats, have failed to tackle a decline in living standards.
Labor has announced policies to freeze energy prices, cap housing rents and to link increases in the minimum wage to the nation's average earnings. It has also pledged to raise tax rates for high earners and said it would consider the option of renationalizing the rail industry.
In his speech, Osborne will say that such promises by Labor are examples of an agenda that he will call "deeply pessimistic" and "anti-business".
"Price and incomes controls, re-nationalizations and erecting the government as the enemy of business and wealth creation will lead Britain down a path of relative economic decline," he will say.
"(The) consensus that we put the national economic interest first - ahead of opportunist party advantage - is under threat for the first time in 25 years."
Labor says its policies offer a fairer strategy of reform for society however. Earlier this week, Labor leader Ed Miliband denied his party had an anti-business agenda.
Britain's economy has started to recover, outperforming international peers, after a prolonged recession induced by the global financial crash in 2008 left the country hugely indebted and borrowing heavily to fund its deficit.
(Editing by Andrew Osborn and Jeremy Gaunt)