Economy seen surviving turmoil

By Paul Majendie

LONDON (Reuters) - Britain is well placed to weather the current instability on the world's financial markets, Prime Minister Gordon Brown's spokesman said on Tuesday.

With the government facing a barrage of criticism over its handling of the economy, Brown's spokesman said the current turmoil was a global phenomemon that originated in the United States.

"Britain remains well placed to withstand this uncertainty in the global economy and of course we will have to remain vigilant," the spokesman said after ministers discussed volatile market conditions at a 90-minute cabinet meeting.

"That is why we will take whatever action is necessary to maintain stability," he told reporters.

Fears have grown that the U.S. economy is about to slip into recession and stock markets tumbled across the globe in response on Monday, raising expectations that central banks will need to cut interest rates soon.

European stocks saw their steepest fall since September 11 2001 on Monday and fell heavily again in early trading on Tuesday. But market talk of emergency interest rate cuts by central banks helped steady prices by midday.

"The fundamentals of the British economy remain sound. Inflation remains low and we have had 61 consecutive quarters of economic growth," Brown's spokesman added.

Brown's bid to calm nerves in highly unpredictable markets came on the day that central bank Governor Mervyn King is to make his first major speech of the year.