Gordon Brown has been building on the foundations laid by Norman Lamont and Ken Clarke after we left the Exchange Rate Mechanism

Michael Howard

But he warned that to join the euro would break a recent cross-party consensus on monetary policy.

Ahead of his speech Mr Howard said the status quo worked "pretty well".

He argued against the UK sacrificing its right to set its own interest rates.

"Gordon Brown has been building on the foundations laid by Norman Lamont and Ken Clarke after we left the Exchange Rate Mechanism (ERM)," he told BBC Radio 4's Today programme.

"We have a framework now which I say is working pretty well... and we won't be keeping that framework if instead of the present system... we hand over that responsibility to a European Central Bank," he added.

Tightening the rules?

Mr Howard's speech to the left-leaning think-tank, the Institute of Public Policy Research (IPPR), is the first of several aimed at setting out Tory economic thinking.

He said that Lord Lamont's decision to create an inflation target of between 1% and 4% in the wake of the UK's disastrous exit from the ERM in 1992 paved the way for Mr Brown's 2.5% target to guide the MPC's decisions.

In his speech, Mr Howard proposed two changes to the procedures of the monetary policy committee (MPC) which sets the interest rates.

The shadow chancellor called for members of the MPC to be appointed for non-renewable terms of four years in a bid to increase their independence from the chancellor.

And he proposed that the appointment of the Bank's governor and MPC members be made subject to the approval of a joint committee of both Houses of Parliament.

After his speech Mr Howard stressed that other areas of economic policy remained "fiercely disputed".

"I am talking today about one aspect of economic policy and on that aspect there is now a very substantial degree of consensus," he said.

Burdened by taxation?

"But there are other areas of economic policy which are fiercely disputed."

He added that the economic future of the UK depended on competiveness of British businesses.

"A stable monetary framework contributes to their ability to do that, but there are many other things that are necessary," said Mr Howard.

"If they are unnecessarily burdened with high taxes and red tape and regulations, then their ability to compete in world markets is undermined and impaired."