As economic clouds follow him to the US, what can Brown do?

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Indy Politics

Gordon Brown vowed not to be diverted from taking the "right long-term decisions for the country" as he flew to the US today for talks in Wall Street on the global credit crunch.

After meeting bank chiefs in Downing Street, the Prime Minister acknowledged the economy faced "difficulties" but said Britain was better placed than its main competitors to weather the storm.

The sense of gloom was heightened as the Bank of England injected £15bn into the money markets and the pound fell to a record low against the euro amid growing concern over the state of the economy.

The Halifax increased rates on some of its most popular deals by 0.5 per cent, highlighting the impotence of the Bank of England's interest-rate cuts.

New figures showed average house prices fell by 1.6 per cent last month, and high street stores announced that sales fell by almost 2 per cent as shoppers tightened their belts. The Government is also facing calls to lessen the impact of the rising price of fuel and food.

Bankers at yesterday's meeting warned against imposing tougher business regulations. The Prime Minister's officials said he had assured them he favoured "light touch" regulation and was not proposing more stringent oversight.

Ministers have called on the banks and building societies to pass on recent cuts in interest rates, prompting private protests from the financial institutions that it is unfair for the Government to blame them for Britain's economic woes.

Mr Brown is seeking more global co-operation between central banks to avoid recession, as well asking commercial banks to be more transparent about their own levels of debt to restore confidence. He is also calling for greater oil production to cut the cost of fuel and ease the economic slowdown.

With polls showing collapsing public confidence in Mr Brown and growing Labour gloom over his performance, he attempted to assert his authority in a series of television interviews before his departure for the United States.

The Prime Minister hit back at Opposition accusations of complacency over the economy, insisting his "sole focus" was on keeping it on track. He told Sky News: "I will always be vigilant. I wake up in the morning thinking, 'What can we do to help homeowners, to help those people who have got small businesses... people looking for jobs, people wanting opportunities so they can have better jobs for the future?"

He said Britain enjoyed "unrivalled stability", low debt levels, faster growth than its competitors and record numbers in work, and said he was taking the "right long-term decisions for the country" which he acknowledged would not necessarily make him "popular overnight".

The Prime Minister's four-day visit with his wife, Sarah, will be dominated by the financial problems besetting the Western world. Discussions with Wall Street bankers today in New York will be followed by talks with Ben Bernanke, chairman of the US Federal Reserve, and a speech on Friday which will focus on international affairs, including the global banking crisis.

Fears over the economy and anger over the decision to double the 10p minimum rate of income tax rate have caused dismay and anger among many Labour MPs.

David Blunkett, the former home secretary, is the most senior Labour figure to condemn the tax increase directly, calling for "adjustments" to ease the impact on the low-paid. He also accused the Treasury of getting its sums wrong a year ago when it asserted that only small numbers of people would be hit by the rise.

The Prime Minister has stubbornly refused to heed protests about the 10p tax issue, but there is growing belief among Labour MPs that the Treasury will have to change the rules to limit the number of losers.

David Cameron, the Conservative leader, accused the Prime Minister of being "arrogant" and "out of touch". He said the Government had wasted money "on a gargantuan scale" in the past decade, when it should have been preparing for leaner times.