Page last updated at 17:03 GMT, Monday, 26 January 2009

Brown warns against 'pessimism'

Gordon Brown has given a wide-ranging speech on the economy

The economic crisis should be treated as "the difficult birth-pangs of a new global order", with new rules introduced on trade, Gordon Brown says.

The prime minister set out a series of actions designed to "replace fear with confidence" and warned against just "muddling through as pessimists".

During a speech defending his handling of the crisis he also warned against the "deglobalisation threat".

His speech came as a poll suggested the Tory lead had grown to 15% over Labour.

The UK is now officially in recession for the first time since 1991, with many businesses blaming difficulties in obtaining loans for the crisis.

'Fill the gap'

Last week the government announced a scheme to offer banks insurance against losing more money from the bad debts which started the credit crunch.

The Bank of England will also be able to buy up to 50bn worth of assets in companies in all sectors of the economy.

Addressing the Foreign Press Association in London, Mr Brown said such measures were intended to "fill the gap" in lending.

He added: "We face a choice. We could allow this crisis to start a retreat from globalisation.

It will be like turning around a supertanker
George Osborne, Conservatives

"As some want, we could close our markets - for capital, financial services, trade and for labour - and therefore reduce the risks of globalisation.

"But that would reduce global growth, deny us the benefits of global trade and confine millions to global poverty.

"Or we could view the threats and challenges we face today as the difficult birth-pangs of a new global order - and our task now as nothing less than making the transition through a new internationalism to the benefits of an expanding global society - not muddling through as pessimists but making the necessary adjustment to a better future and setting the new rules for this new global order."

'Gloomsters'

He said: "As the downturn spreads across the world, we are, for the first time, seeing cross border flows growing more slowly than domestic flows. And we are seeing banks favouring domestic lending over foreign lending.

"This is a trend which must be halted if we are to avoid the risk of a damaging worldwide spiral of deleveraging and deglobalisation - with adverse consequences for all economies."

Mr Brown received some support for his attempts to brighten the gloom as Barclays Bank shares soared 60% after its chairman and chief executive wrote an open letter to investors saying its profits would be above 5.3bn.

HAVE YOUR SAY
The effects of the recession are now really starting to bite
Chris Beaven, Stevenage

And the director general of the Confederation of British Industry, Richard Lambert, wrote in the Daily Telegraph that "the UK is not about to go bust" and that recent government measures "will be enough to prevent something much worse (than the current recession) - provided we don't allow ourselves to get swept away by the gloomsters".

But SNP spokesman Stewart Hosie described Mr Brown's comments as "meaningless rubbish" designed to deflect criticism from the prime minister.

"Gordon Brown might be better answering why he allowed a credit bubble during his tenure as chancellor or why debt levels were so high that the recession can now only be fought by doubling the national debt to over 1 trillion," he said.

Meanwhile, shadow chancellor George Osborne told the Institute of Chartered Accountants that a Conservative government would make Whitehall more accountable.

'Incentives'

He promised to include a clause on the responsibility to taxpayers in the employment agreements of senior civil servants, with the Civil Service Code being rewritten to incorporate "responsible financial management".

Public sector employees should also be rewarded for suggesting waste-cutting ideas, Mr Osborne added.

He said: "We need a new culture of financial discipline across Whitehall. That means new incentives, new information and new powers of investigation."

Mr Osborne added: "Creating a new culture of financial discipline in Whitehall is not going to be easy. It will be like turning around a supertanker.

"But with a determined political will and the right plans, we can do it. We can turn the Whitehall supertanker and put Britain on the right course."

A ComRes opinion poll for the Independent suggests the Conservatives have increased their lead over Labour to 15 points - from five points last month.

It puts the party on 43%, with Labour on 28% and the Liberal Democrats on 16%. ComRes telephoned 1,012 adults from 21 to 22 January.

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