UK's Darling says considering fiscal reform

LONDON, July 19 (Reuters) - Britain's finance minister Alistair Darling said in an interview published on Saturday that he was considering reforming the rules governing public finances and expected the economic downturn to last for years.

The Times said Darling confirmed he was considering revising the government's fiscal rules, but would not give details. "This is routine work that has been going on at the treasury for several months," Darling told the Times in an interview.

Darling had said on Friday that the British government has made no decision yet on the reform.

Friday's Financial Times said Treasury officials were working on plans to relax the government's fiscal rules, allowing more borrowing.

Official figures showed British public sector borrowing in the first three months of the fiscal year rose to 24.4 billion pounds, the highest for any quarter since records began in 1946.

The Times said Darling expected the economic downturn to continue for years and admitted it could still be a factor when the country next goes to the polls, expected in 2010.

Darling said the country was not in recession but that oil prices would stay high and there was "bound to be more downward pressure" on the housing market in the coming months.

He also said that more banks could be vulnerable to collapse. "The real problem we are facing today is a consequence of the fact that too many banks at a very senior level didn't understand the extent of the risk to which they had become exposed."