Gordon Brown today forecast that despite the biggest global slowdown for almost 30 years, Britain's economy would grow faster this year than all the other major economies.
In his keenly-awaited Pre-Budget Report, Mr Brown told the Commons that in the face of a global downturn, Britain was the strongest of the major economies.
But, in a clear reference to the firefighters' dispute, he warned that the Government would not yield to inflationary and unaffordable pay settlements.
"It is because we are determined to have both stability and value for money in reformed public services, that just as in the private sector, public sector pay rises must be set at a sustainable rate and justified by productivity," he said.
Mr Brown said 20 of the world's biggest economies, accounting for 60% of worldoutput, had been or were in recession after the "sharpest slow down in economicactivity for almost 30 years".
World trade growth fell 12% last year and the challenge for the British economy had been to "steer a stable course" combining low inflation with sustained demand growth and high levels of employment.
He said 175,000 more people were in work this year than last year and a total of 1.5 million jobs had been created since 1997.
Unemployment was lower than in Japan, America and the euro area for the first time in 50 years.
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