Brown Warns Against Real Risks To U.K. Recovery

The U.K. economy may face bumps in the road ahead, but the government will not let the economy fail, Prime Minister Gordon Brown said Wednesday.

"Although the economy is now growing, recovery is still in its early stages - and remains very fragile," Brown said in a speech in London. "There will be many months ahead of conflicting statistics, false hopes and mixed signals."

He added, "While we have come through the worst of this dreadful storm, the waters are still choppy. There are still real risks to the recovery."

Setting the stage for a May 6 general election, Brown said the Budget would be presented on March 24. He stressed that his government will reduce the U.K.'s 178 billion pound deficit within four years and confirmed a pay freeze on senior public employees.

Moreover, he said the government will also reduce the size of the structural deficit by two-thirds over the same period.

Brown also said he sees a real risk of the global economy experiencing a lost decade of low growth and low employment if no action is taken.

In order to prevent a new crisis, Brown said it is necessary to gradually introduce core requirements that banks hold much more and much higher quality capital.

He noted that the government has a crucial role to play in ensuring that the timing of bank recapitalization meets the needs of the economy. He wants Britain to have the highest standard of bank supervision in the world.

Expressing confidence in the economy, Brown said he wants his country to excel in the fields of science, digital enterprise and communications.

Meanwhile, he said his government faces tough times on making decisions on exiting economic stimulus measures, noting that cutting stimulus now would harm the U.K.'s frontline services, investment in growth sectors and would push the economy back into recession.

"We dare not risk the recovery. For our task above all else is to preserve and expand the jobs - and lift the standards of life - of the British people," Brown said. "We are weathering the storm; now is no time to turn back. We will hold to our course. And we will complete this mission."

Brown also said last the 18 months have not been a time for allowing the old conventional wisdom or short term headlines to constrain thoughts.

He said the global financial crisis became so profound that it raised fundamental questions not just about established economic orthodoxies, but about the whole balance between the state, markets and the institutions that regulate and govern them.

"It was a period that has provided one of the greatest tests of character," Brown said.

However, he noted that the U.K. avoided a great depression by learning from the mistakes made and experience gained in previous recessions and by making tough but necessary decisions.

Further, Brown said policymakers in Britain and across the world have reached a crossroads in their response to the global economic and financial challenge.

"Analysis by the International Monetary Fund shows that if we get things right - if we repair and reform the financial system, invest in green jobs, and bring down trade barriers - we can return to the world growth rates of 5% a year seen before the crisis, and on a more secure basis," Brown said.

But if things go wrong, it would cost the world a full $6 trillion and - over the next four years - up to 200 million jobs, he added.

Brown also stated that his government would not jeopardize British jobs and growth by satisfying the reactionary impulse to isolate the U.K. from Europe, noting that he has chosen to enhance the country's already strong relationship with the rest of Europe.

Copyright(c) 2010 News.com, Inc. All Rights Reserved

Published: 2010-03-10 13:55:00 UTC+00 1 year, 10 months, 3 weeks, 5 days, 11 hours, 9 min. ago

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