Brown pledges to kickstart lending

LONDON (Reuters) - Prime Minister Gordon Brown was quoted on Saturday as pledging action within weeks to kickstart bank lending but he played down the possibility of a second recapitalisation of the country's banks.

In an interview with The Observer newspaper to be published on Sunday, Brown outlined plans for a 1930s U.S.-style public works programme to ease the pain of recession by creating around 100,000 jobs. He plans to hold a "jobs summit" on January 12.

And he called for a G20 summit, which he will host in April, to devise a "global recovery plan" modelled on the steps Britain has taken to stop the downturn turning into a slump.

The Observer quoted Brown as pledging action "within weeks" to get banks lending again. He promised new measures to help firms with good long-term prospects obtain credit, it said.

"We have got to create the conditions in which it's possible for banks to resume lending," Brown said.

Asked if that could involve a further recapitalisation of British banks using public money, he said: "That is not the first thing on any agenda. The more important thing is getting the resumption of lending by other means."

The BBC and The Times newspaper both reported on Saturday that the government was considering a second bailout for Britain's banks because measures taken so far had failed to get them lending again.

A Treasury spokesman described the reports as "speculation".

The government announced in October it would spend up to 37 billion pounds to boost the capital of three major banks. The credit crunch has forced Brown's government to nationalise two other banks.