Patrick Wintour and Larry Elliott
Monday, Sept 22, 2008
Gordon Brown yesterday pinned hopes of reviving his premiership on a package of measures designed to tackle the economic crisis, including a drive for tighter international controls of the global money markets and a crackdown on the culture of irresponsible City bonuses.
However, the prime minister also paved the way for higher levels of public borrowing, in breach of the Treasury’s own rules, following the tumult on world markets last week.
In his speech to the Labour party conference today, the chancellor, Alistair Darling, will promise to do “whatever it takes” to rectify the mistakes made by the markets, but he will make clear: “Just as one government alone cannot combat global terrorism, just as one government alone cannot combat climate change, so one government alone cannot deal with the consequences of globalisation.”
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Brown’s plan includes:
· A stronger international regulatory system, based around an early-warning system run by the IMF, which he will set out when he goes to New York at the end of this week.
· Tighter control of “irresponsible” city bonuses.
· A regime of stronger intervention in the City, under the new chairman of the Financial Services Authority, Lord Adair Turner. Turner warned yesterday: “What has gone wrong with the world’s financial system is not just a few minor things and it can’t be tidied up by a little more disclosure or transparency.”
But the prime minister also signalled that the financial crisis means Britain’s debts will go higher, insisting: “It is right to borrow at the moment. Those people who say we should be cutting public expenditure and cutting investment at the moment are wrong. In these unique circumstances, it is right to borrow and raise public expenditure.”
This article was posted: Monday, September 22, 2008 at 3:50 am