Brown urges Bush to tackle deficit

Gordon Brown will today urge the US administration to tackle its record current account deficit because of the impact of the dollar's fall on the rest of the world.

Gordon Brown will today urge the US administration to tackle its record current account deficit because of the impact of the dollar's fall on the rest of the world.

The Chancellor told MPs hours before he was due to fly to New York last night: "The depreciation of the dollar is a factor that is affecting not just the British economy but economies around the world.

"I will be meeting the American administration over the next few days and will be urging them that, with the current account and budget deficits, they have got to set a clear path for showing that these can be dealt with over the next period of time."

His comments came as the US current account - its balance on goods, services, tourism and investments - hit a record $164.7bn (£85bn) in the third quarter. However the dollar rose as the shortfall was less than expected.

Mr Brown, who will meet his counterpart John Snow to discuss the handover of the chairmanship of the Group of Eight nations to the UK, appeared to play down the prospect of an agreement by ministers to stem the dollar's fall.

"When we have our discussions in February, we will not be back to the sort of discussions we had at Louvre and Plaza," Mr Brown said, referring to the two best-known international currency accords of the Eighties.

Earlier the Chancellor issued a cast-iron pledge that he would not break his "golden rule" on the public finances and rebuffed claims that his forecasts of a rebound in corporation tax receipts were flawed.

Challenged by Conservative Party members of the Treasury Select Committee to say what he would do if he broke the rule - which dictates that he only borrows to invest over the economic cycle - he said: "That won't happen. There are no circumstances I can see coming before the committee today that I believe [would mean] that we would not meet our fiscal rules."

However he appeared to leave himself room to alter the timing of the economic cycle, which would help him meet the rule in this cycle.

Mr Brown said: "The cycle will end when the output gap will close and because of that ... it will depend on the performance of the economy and one does not prejudge what is happening in the economy. We expect it to end next year but that is not something we have set in stone because we are not in a position to do so."