Brown sets economy as "overriding priority"

By Kate Kelland and Frank Prenesti

LONDON (Reuters) - Britain will seek to strengthen its financial system and help families and small businesses survive an impending downturn, the government said on Wednesday as it laid out its policy agenda for the year ahead.

In a short legislative programme set out in the traditional speech to parliament by the Queen, Prime Minister Gordon Brown said he would focus on easing the pain of a looming recession by promising laws to protect savers and prevent banks suffering funding crises that have crippled the economy.

"The strength of the financial sector is vital to the future vibrancy of the economy," the Queen said in the speech.

"Legislation will continue to be taken forward to ensure fairer and more secure protection for bank depositors and to improve the resilience of the financial sector."

The nation's banking system has been shaken by the global economic crisis, with two major lenders now effectively in the hands of the government and others struggling. Their reluctance to lend has had a profound knock-on impact on the economy, particularly on small businesses starved of operating funds.

Despite the problems, Brown has won praise for his handling of the financial crisis, with voters and previously sceptical party members now banking on his experience of 10 years as Chancellor to help Britain ride out the storm.

His opinion poll ratings, once far lagging the Conservatives, have rebounded, meaning the next general election, due by mid-2010, may be tighter than once thought.

By making aid to families and small businesses the centre of the coming legislative agenda, Brown will be hoping to capitalise on his newly bolstered popularity and boost his party's -- and the economy's -- fortunes ahead of the election.