Brown says UK to maintain AAA credit rating
LONDON (Reuters) - Prime Minister Gordon Brown said on Wednesday he believed Britain would maintain its coveted top credit rating and announced a pay freeze for senior civil servants and military officers to help tame a record deficit.
Setting out his economic plans weeks before an election, Brown said recovery remained fragile and that to change course now would risk plunging Britain back into recession. He drew on his experience last year when he chaired the group of 20 leading and developing nations during the global financial crisis.
His message contrasted with that of Conservative leader David Cameron who is campaigning on a "time for change" slogan and wants to make a quicker start on cutting a deficit forecast to exceed 12 percent of GDP this year.
"We face crucial decisions. Cut now at home -- fail to protect our frontline services, fail to invest in the growth sectors of the future -- and we could push our economy back into recession," Brown said in a speech at Thomson Reuters in London.
Brown, who was chancellor for a decade until 2007, said cuts should only come once recovery was assured; but jittery markets should take heart from a government commitment to halve the deficit over four years.
"This four-year deficit reduction plan, legally binding, legislated in parliament, is I think very clear and I think the markets should understand this," he said.
Brown said he believed that the longer maturity of government debt put it in a better position than other countries with large deficits.
Speaking at Thomson Reuters last week, Conservative business spokesman Ken Clarke drew parallels between Britain and Greece, which is facing a debt crisis.
Asked about Britain's triple A credit rating, Brown said: "I believe we will maintain that credit rating."
Fitch Ratings said on Tuesday that Britain needed stronger fiscal adjustment, although it was still within tolerance of a triple-A rating. Losing the top rating pushes up the cost of servicing debt.
Brown's Chancellor Alistair Darling will deliver a final budget on March 24 before an election expected on May 6. Brown said that would include measures designed to foster future growth after the worst recession in more than 50 years.
Figures released on Wednesday showed manufacturing output fell in January, putting fresh pressure on sterling and underlining Brown's warning that data would be volatile in the coming months.
The Conservatives had a lead of more than 10 points in opinion polls for many months, but the gap has closed and there is now the prospect of an inconclusive election in which neither of the two main parties wins an outright majority.
To show he was serious on tackling the deficit, Brown announced a wage freeze for highest paid public sector staff.
"We will ... freeze the pay for senior staff in the civil service, senior staff in the military, the judiciary, senior managers in the health service and the pay of consultants, GPs (family doctors) and dentists," he said.
"These measures along with the new controls on senior pay which I announced in December will save money immediately and by 2013/14 save more than three billion pounds."
The freeze on pay for the military top brass comes when Britain has around 10,000 troops fighting in Afghanistan.
Brown's character has become a focus in campaigning ahead of the election, with the prime minister forced to deny accusations that he intimidated staff.
Brown sought to turn the debate to his advantage, stressing he had the determination to push his policies through.
"I will not let you down," he said.
(Additional reporting by Estelle Shirbon; edited by Ralph Boulton)
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