The Labour Party sought to regain the initiative on Monday with plans to support the economic recovery and raise the bar for corporate takeovers.

Unveiling Labour's platform for what would be an unprecedented fourth consecutive term in office, Prime Minister Gordon Brown acknowledged that his party was in the fight of its life against the Conservatives.

He set out plans for reforms to make public services more efficient at a time when the need to rein in a gaping budget deficit means there is little room for increases in spending.

Poorly-performing schools, hospitals and even police forces could be taken over by more efficient peers.

"Today I lay before you a radical and realistic plan for Britain that starts with securing the recovery and renews Britain as a fairer, greener, more accountable and more prosperous country," Brown told supporters at a gleaming new 545 million pound hospital in Birmingham.

Labour's manifesto said the party would not jeopardise a fragile economic recovery after the worst recession since World War Two with "reckless cuts to public spending this year."

Labour is locked in a battle with the Conservatives over how fast and how deep to reduce a budget deficit forecast to exceed 11 percent of Gross Domestic Product (GDP) this fiscal year.

It is committed to halving the deficit over the next four years but says more aggressive reduction plans by the Conservatives could jeopardise the recovery.

The Conservatives are ahead in the polls but not by enough to

be sure of an overall majority in parliament. Investors fear a "hung parliament" would make decisive action to tackle the deficit less likely.

CHANGED COUNTRY

Labour's manifesto showed how much the global financial crisis has changed the political landscape in Britain. During its 13 years in office, Britain has been wide open to foreign takeovers of its companies.

But the manifesto called for reform, saying two-thirds of shareholders should have to back a takeover in future, instead of just a majority.

"It (the Labour proposal) would make hostile bids more difficult and make UK companies less attractive as takeover targets," said a senior London-based merger and acquisitions banker, speaking on condition of anonymity.

Labour pledged to force banks to hold more capital and to break up state-owned banks. The Financial Services Authority watchdog could be given new powers to quash executive pay if it encouraged excessive risk-taking, the manifesto said.

"We will continue to support the economy while growth is still fragile ... Once the recovery is secure, we will rapidly reduce the budget deficit," it said.

The manifesto said Labour would not raise basic or higher rates of income tax nor extend the reach of Value Added Tax (VAT) sales tax.

Brown did not give a cast-iron guarantee that Labour would not raise the rate of VAT, currently 17.5 percent, but said the party's deficit-cutting plans did not call for a rise in VAT.

The Conservatives accused Labour of exploiting the state-run National Health Service by using a new hospital as the backdrop for its manifesto launch.

The first week of campaigning was dominated by a row over Labour's plan to raise the National Insurance payroll tax. The Conservatives won backing from dozens of leading business executives for their plan to partly reverse the planned rise.

The Conservatives unveil their election manifesto on Tuesday.

Analysts said it was hard for Labour to come up with a radical programme after more than a decade in power.

"By and large the electorate probably won't take a great deal of notice of the manifesto," said Alastair Newton, senior political analyst, at Nomura.

"Much more important will be the TV debates, which start on Thursday," he added.

(Additional reporting by Victoria Howley; Editing by Jon Boyle)