British chancellor Gordon Brown today raised petrol duty, doubled air passenger taxes, and pledged a massive cash boost for education in his last pre-budget report before taking over as prime minister.
Mr Brown outlined the priorities for his expected premiership next year - tackling global warming, reducing inequality and meeting the economic challenge of India and China.
"Asia is already out-producing Europe," he told parliament. "China alone is manufacturing half the world's computers, more than half the world's digital electronics and this Christmas more than 75 percent of children's toys."
"In the next 10 years the competitive challenge is even more profound," he added.
Consequently, Mr Brown said he would rather invest in education than cut taxes and pledged 36 billion pounds to the sector over the next four years.
The longest-serving finance minister in more than a century, Mr Brown is set to replace Tony Blair who has said he will step down next year.
Aides said the pre-budget report will throw down the gauntlet to David Cameron, who celebrates his first anniversary in charge of a resurgent Conservative party on Wednesday.
Following former World Bank economist Nicholas Stern's report painting an apocalyptic picture unless urgent action is taken to tackle global warming, Mr Brown announced several environmental measures.
Fuel duty goes up from Thursday by 1.25 pence a litre but the fuel duty escalator will not be restored.