Brown defends handling of banking crisis

Gordon Brown hinted at further cuts in interest rates yesterday after announcing he had consulted world leaders, including the US President George Bush, over the global banking crisis.

In an attempt to steady nerves in his own party about Labour's slump in the polls he appeared with the Chancellor, Alistair Darling, at his last press conference before the Christmas break and insisted that he was on top of the crisis.

The Prime Minister said the Governor of the Bank of England, Mervyn King had assured him that the "fundamentals" in the British economy, including low inflation, remained sound.

"We stand able to weather the global financial storms and to respond where necessary, as the Bank of England has already done, with a cut in interest rates," he said.

Pressed over the 57bn rescue of Northern Rock, Mr Brown refused to give a guarantee that all the taxpayers' money would be returned, but he insisted that the taxpayers' loans were covered by the bank's assets.

He confirmed that nationalising the troubled bank was one of the options still under review.

The Prime Minister said he held talks yesterday on the state of the economy with the Chancellor, Mr King and the chairman of the Financial Services Authority, Sir Callum McCarthy, who has been criticised for not acting on Northern Rock more quickly.

Mr Brown said he had invited the German Chancellor Angela Merkel and French President Nicolas Sarkozy to London in the new year for talks on their joint proposals for reform of the financial institutions to create an "early warning" system for financial trouble.

"I have been talking about the global financial turbulence with Chancellor Merkel, President Sarkozy, the President of the European Commission [Jose Manuel Barroso] and I will talk later to President Bush," said Mr Brown.

In a message directed at his party after rumblings of discontent over the "data disaster", the proxy funding scandal, and wobbles over Northern Rock, he said: "We are not going to be diverted."

The Prime Minister warned his MPs: "Focus on the long-term challenges. Focus on what matters to the people of this country. Many of the things that have been written about recently will be forgotten. Many of the things that are important to the people of this country affordable housing, health, education, access to GPs, cleaner hospitals these are the issues we will concentrate on."

He has ordered cabinet ministers to raise their performance by returning in the new year with a range of initiatives to regain momentum. Mr Brown promised radical proposals to tackle binge drinking, a White Paper on constitutional reforms including plans for a largely elected House of Lords and a clean-up of the honours system.

The Chancellor said he would bring forward plans for reform of the banking system. "I will be announcing some wide-ranging reforms in January which I believe will improve the position, especially in relation to banks which might get into difficulty," said Mr Darling.

The Prime Minister brushed aside reported criticism of his leadership by Charles Clarke, the former Home Secretary, who accused him of failing to support his Cabinet ministers.

Mr Brown spoke to Mr Clarke yesterday about the interview which is understood to have taken place two months ago, and reassured him that Mr Clarke still had a front-line role to play with a possible return to Government in the new year.

"I think Charles Clarke has got a very important role to play in the future," said Mr Brown.

In the face of growing anger over police pay, Mr Brown said that the decision to stage pay awards in the public sector, including the police, had been pivotal in keeping inflation down to 2.1 per cent, almost at target, compared to four per cent in the US and three per cent in the Euro zone.

Start your day with The Independent, sign up for daily news emails
election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
2015 General Election

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Marketing Manager (B2B) - Romford - £40,000 + car

£35000 - £40000 per annum + car and benefits: Ashdown Group: Marketing Manager...

Ashdown Group: Helpdesk Analyst - Devon - £20,000

£18000 - £20000 per annum: Ashdown Group: Helpdesk Analyst - Devon - £20,000 ...

Ashdown Group: Data Scientist - London - £50,000 + bonus

£35000 - £50000 per annum + generous bonus: Ashdown Group: Business Analytics ...

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'