British prime minister Gordon Brown denied today that his tax policies were breaking the government's fiscal rules and said he hoped the Bank of England would be able to cut interest rates further.
Mr Brown said the problems facing the economy were international in origin and he was probably the best person to tackle the issues, rejecting suggestions he should quit to prevent the Labour Party losing the next general election.
Asked whether he wanted interest rates to be cut again, he told BBC radio: "I hope we will be able to do so but I've always said that this is a matter for the Bank of England."
On Wednesday, central bank revised up its inflation forecasts, suggesting there was little scope for further monetary easing, despite predictions of sharply slowing growth and possibly recession.
The bank has cut interest rates three times since December, bringing them down to 5.0 percent, and analysts had been expecting another cut in June before inflation data and the bank's report this week scotched those hopes.
Mr Brown rejected suggestions that a surprise £2.7 billion tax cut package announced earlier week flouted rules set when he was finance minister to keep a tight rein on government finances by restricting borrowing to fund investment.
"I don't accept that," he said. "We have not broken the rule. The rule is over the economic cycle. You don't look at each individual budget," he said.
"What are these rules there for? To help us in difficult times, when you are facing a world downturn, to make the right decisions for the economy."