By Steve Schifferes BBC News Online economics reporter at the TUC in Brighton

Gordon Brown is widely seen as the favourite of the union movement to succeed Tony Blair as prime minister.

But he delivered a mixed message in his first emergence into the political arena after an absence of nearly two months.

The Chancellor told the TUC that Britain's economy had weathered the global slowdown better than most of its rivals.

But even while listing Labour's achievements, there was a more subdued tone about the economic outlook, in contrast to the triumphalism and optimism at the time of the last Budget, when his economic forecast had been greeted by widespread scepticism by economists.

To the limit

Instead, the Chancellor warned that the huge competitive challenges of globalisation meant that more tough long-term decisions must be taken.

And he said that the government would need a continued "commitment to long term stability and discipline so that we will be able to have growth in public spending in the next spending round".

Mr Brown did not offer a new economic forecast, but most commentators suggest the slowing economy and the growth of public spending will push the Budget deficit to the limit of the government's own fiscal rules.

Mr Brown warned that the "foundation of all we do, the rock on which we build, the pre-condition for what we achieve, and the basis of long term trust is our ability to secure economic stability".

Collision course on reform

The deteriorating economy has put pressure on Labour's pledge to increase spending on public services.

There will be "no retreat from demanding efficiency and value for money as well as equity as we renew and reform each of the public services," the Chancellor said.

And he renewed support for Labour's policy of foundation hospitals "with extra freedoms for high performers".

The Chancellor did sound a conciliatory note in one area of concern to the unions - offering dialogue on the issue of a "two-tier workforce" when private firms take on public sector functions.

Minimum wage rise

Dave Prentis, the boss of Unison, the largest union which represents public sector workers, said it was a bit late for discussions - he would be looking for concrete commitments from the government on these issues ahead of the next general election.

Other union leaders were disappointed by his failure to say more about manufacturing or workers' rights.

Mr Brown did gain applause for his promise to raise the minimum wage above �5 an hour, and to eliminate child and pensioner poverty.

But his tough language of "no retreat to inflationary pay rises, no retreat to loss making subsidies, no retreat from a pro enterprise, pro industry agenda" has gained him few new union allies as Labour prepares the groundwork for taking its economic case to the electorate.