The Chancellor is reported by colleagues to have been buoyant over being identified as Mr Blair’s “heavyweight” who would floor the “flyweight” David Cameron. During an hour-long discussion he said that Britain’s strengths, including its science base and creative industries, meant that it was well equipped for the challenges of the future.

Mr Blair and Downing Street remained coy over confirming that Mr Brown was his choice — mainly because the Prime Minister is expected to give formal backing at a later stage, probably after he announces when he is stepping down.

But Hazel Blears, the party chairman, emerged from the Cabinet meeting, where there had been much joking about boxing metaphors, to announce that Mr Blair, in his reference to the clunking fist who would sweep aside Mr Cameron, was “talking about the Chancellor of the Exchequer”.

The Treasury, meanwhile, confirmed that Mr Brown’s final Pre-Budget Report (assuming he becomes leader), in which he is to set out his immediate plans for the economy, will take place on December 6.

It will clearly form the basis of his leadership campaign, whenever that comes. Treasury sources said that the report would be dominated by “substantive” measures on the Stern review on climate change, one from Sir Rod Eddington on transport and infrastructure, another from Kate Barker on planning, and a fourth from Lord Leitch on skills.

Making plain that economic reform would continue to be the background to the PBR, Mr Brown told the Cabinet that maintaining flexibility in the economy was essential to economic progress. Progress on skills, science, transport and planning would be key to maintaining Britain’s record of economic success.

Mr Brown is to discuss his priorities today with business chiefs at the first meeting of his international business advisory council. He is expected to use the meeting to announce that he will implement in full the recommendations of Sir David Varney on making HM Revenue & Customs more responsive to the needs of large businesses. There will be a new system of advance rulings, giving companies greater certainty in advance of big investments.

Mr Brown told the Cabinet that China, India and Brazil would continue to drive world growth, with their share of global GDP rising to more than a quarter by 2015, with each becoming increasingly important as consumers and producers.

Key policy priorities for the next ten years would include strengthening investment in research and science, equipping the workforce with skills for modern industry, a continued focus on private and public sector investment to support growth, and a planning system supportive of economic prosperity. He emphasised the need to make further progress on a world trade deal to avoid a slide back into protectionism.

The Chancellor also spoke of the “moral and economic need” to ensure that the benefits of continued economic strength were shared fairly.

Mr Blair, speaking about his retirement in an internet interview, said that his biggest frustration was the pace of change in government. “You take decisions as a government but to drive that thing down to ground takes time . . . One of the things you learn about the job is that it is never done.”

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