Britain's Brown says he is "sticking to the job"

By Sumeet Desai

WASHINGTON (Reuters) - British Prime Minister Gordon Brown struck a defiant note on Thursday in the face of his growing unpopularity, saying he was focused on keeping the economy on an even keel with the right long-term decisions.

While he is on a three-day tour of the United States, Brown's poll ratings have fallen sharply at home and there is a growing sense of a government under siege as Britons fret about their well-being because of falling home prices and a slowing economy as a global credit crunch takes its toll.

Brown's Labour Party, in power for more than a decade, is facing a drubbing in local elections on May 1, raising speculation he might face a challenge for the leadership before the next national election, which must take place by 2010.

"I'm sticking to the job and I'm getting on with the job," Brown said, brushing aside a question on his problems at home at a White House news conference alongside President George W. Bush.

Worried about their own future, many Labour lawmakers are unhappy with Brown's decision last year to abolish a 10 percent tax rate that benefited low earners in order to make a cut in the main rate of tax to 22 percent from 20 percent.

A Labour member of the House of Lords led the attack on Thursday. He was quoted as saying in a newspaper interview that senior members of the government were now turning their minds to who can replace Brown, who took over from Tony Blair last June after a decade as finance minister.

Then Angela Eagle, a junior member of Brown's government, was reported to have quit, only to say later she had talked with the prime minister and was not resigning after all.

Asked about anger over the abolition of the 10 percent tax rate, Brown made it clear he was not about to roll back.

"My answer to people who say what is happening domestically is that we are taking the right long-term decisions for the British economy," he said. "We will see these long-term changes through and these are the right long-term changes for the British people.

Brown said the changes were part of a major reform of the tax system which had also brought down the headline tax rate for millions of people and that there had been offsetting allowances and credits for people on low incomes hit by the abolition of the lower rate.

GLOBAL PROBLEM

Fears of a housing crash have shot up over the past month after one survey showed prices falling at their fastest monthly rate since the 1992 recession, when hundreds of thousands lost their homes as they became unable to pay their mortgage bills.

The government has put a brave face on the decline, arguing it needs to be put in the context of prices more than doubling over the last decade, but is clearly rattled and calling for lenders to pass on interest rate cuts to their customers.

Brown called in senior financiers in London earlier this week and then met Wall Street executives in New York on Wednesday to see what could be done to end the funding squeeze that is putting pressure on prospective homeowners and existing ones who need to refinance their loans.

The prime minister said the market turmoil had also been a big feature of his talks with Bush. "Both Britain and America are taking steps to help homewowners, " he said.