Gordon Brown seeks to calm fears over economy

 

The British Chancellor of the Exchequer Gordon Brown has sought to allay business fears by telling employers that he is cautiously optimistic about Britain's ability to ride out the global slowdown.

His address to the annual conference of the Confederation of British Industry (CBI) followed a week of gloomy news on the economic front, with a recession in the United States now seen as a near certainty.

In Britain, there have been signs that buoyant consumer demand, the engine of economic growth this year, is faltering, and could drag the overall economy into a deep downturn.

But Brown struck an upbeat note on future prospects, welcoming the recent global round of interest rate cuts and hinting that there was scope for UK rates, currently at a 37-year low of 4.5 percent, to fall further.

He told the CBI that central banks around the world as well as Britain have made clear their determination to take any necessary further action to combat the slowdown. The Bank of England, along with other major central banks, is widely tipped to cut rates further this week.

On the escalating cost of the military campaign in Afghanistan, Brown said it was Britain's duty to meet its obligation to root out terrorism and the supply of funds and equipment to terrorism .

"And it is a duty we are able to discharge because of the discipline and tough rules we have applied to public spending in the past," Brown added, appearing to play down the suggestion that he would have to put up taxes.

But in other areas of government spending, Brown said this was the time for more discipline not less. "And I can say to you that, throughout, we will not relax our fiscal disciplines and we will work within the fiscal rules we set in 1997 and have upheld throughout."