ED Balls, Chancellor Gordon Brown's right-hand man, has warned that the UK's economic prosperity is under threat from rising xenophobia.

The Economic Secretary to the Treasury said the government and the business community must do more to extol the virtues of the free market and globalisation, in a bid to thwart far-right political parties exploiting fears about immigration and overseas competition.

Speaking at a Labour conference fringe event in Manchester at the Institute of Directors, Mr Balls said he was concerned about the rise in support for the BNP in the north, in his local council area and in other northern towns. The MP for Normanton in Yorkshire said: "Globalisation is working for British businesses and the British people. "But people don't see the benefits. Instead they feel insecurity in their lives.

"If we don't get the politics right, that extremism will shift into the mainstream.

"We have got to make a better case for why open, competitive markets are in the interests of consumers and job creation.

Social justice

"Poor housing and poor education are important for reasons of social justice, but is also the feeding ground for xenophobic comments against open markets.

"We need to make sure Britian is a beacon for openness.

"British business will flourish if we can keep open, global and competitive and we invest in skills and innovation."

He said that while an advocate for enlargement of the European Union, it was right to "manage" the number of migrants allowed to come and work in the UK from countries such as Romania and Bulgaria.

"We have to look at the economic context of migration now - unemployment is rising rather than falling and there are concerns over our infrastructure being able to cope.

Mr Balls also praised the "amazing renaissance of Manchester" and said the present economic leadership, was akin to the civic leadership in the industrial revolution.

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