UK: British Prime Minister Gordon Brown rules out giveaways amid election talk / Former U.S. Fed chairman Alan Greenspan calls the financial crisis earlier this year an "accident waiting to happen"

British Prime Minister Brown says there'll be no government spending splurge, while British finance minister Darling wants the safety net for savings increased. Former U.S. Fed chairman Greenspan calls the financial crisis earlier this year an "accident waiting to happen". British Prime Minister Gordon Brown said on Monday (October 1) there would be no government spending splurge as speculation grows that he will soon call a snap general election. In a speech at the Reuters headquarters in London alongside former U.S. Federal Reserve chairman Alan Greenspan and British finance minister Alistair Darling, Brown said his government would not relax its fiscal discipline for any short-term gain. "There will be no irresponsible relaxation of pay discipline in the public sector, no unfunded spending commitments, no unaffordable promises, no short-term giveaways," Brown said. "A responsible government demands that stability will be our determination first and foremost yesterday today and tomorrow." His declaration comes after the opposition Conservative party pledged at the start of their annual conference to scrap duty for first-time buyers of homes costing less than 250,000 pounds (507,700 U.S. dollars). Brown's Labour party is running far ahead of the Conservatives in the polls, raising expecatations that the new prime minister could call an election as early as Oct. 25 or Nov. 1, nearly three years earlier than he is required to. Opinion polls suggest the government's popularity has not been dented by last month's Northern Rock crisis when there was a run on the bank after it sought emergency cash from the Bank of England. Brown, who was finance minister for a decade before taking over from Tony Blair in June, said the British economy would survive the current storm in credit markets. Alan Greenspan, the former chairman of the U.S. Federal Reserve and now part-time adviser to Brown, commented on the recent crisis in which financial markets were dramatically affected by U.S. sub-prime lending -- loans to people with such bad credit history, they would not normally be eligible for a home loan. "The abrupt upheaval in the world financial market ... was an accident waiting to happen," Greenspan said. "If it had not been triggered by the large loss suffered on American securitised sub-prime mortgages, it would have eventually surfaced as a rupture of some other financial product in the market." British finance minister Alistair Darling said at the same event that from Monday, the government will guarantee all bank deposits up to 35,000 pounds. Previously, only the first 2,000 pounds were guaranteed and then 90 percent of the next 33,000. Darling also set out Britain's thinking on how international financial regulation needs to be improved.

ITN Source | October 2, 2007

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