UK downturn could help fuel terrorism: memo

By Peter Griffiths

LONDON (Reuters) - A economic downturn in Britain could aggravate racial tensions and grievances that help to feed terrorist recruitment, according to a leaked government document.

The draft letter from the Home Office warned that a recession could create conditions likely to increase support for radical Islamist groups.

As jobs become more scarce, "we should expect increased public hostility to migrants," said the leaked memo, entitled "Responding to Economic Challenges".

"There is also a risk of a downturn increasing the appeal of far-right extremism and racism, which presents a threat as there is evidence that grievances based on experiencing racism are one of the factors that can lead to people becoming terrorists."

The warning came after finance minister Alistair Darling said the current slump could be the worst for 60 years -- increasing pressure on Prime Minister Gordon Brown, who is trailing the opposition Conservatives in the polls.

The downturn has already seen house prices tumble, the pound fall against the dollar and economic growth grind to a halt for the first time since 1992.

A Home Office spokeswoman said on Monday that the letter contained draft advice to Brown's 10 Downing Street office, but was never sent.

"We do not normally comment on leaked documents but this is draft advice that the Home Secretary has not cleared and has not been sent to Number 10," the department added in a statement.

"It is however appropriate that the Home Office considers the effects the economic climate may have on crime and other policy areas."

Britain has been a frequent target of plots by militant groups which accuse it of waging war against Islam by supporting the United States in the invasions of Afghanistan and Iraq.

The MI5 intelligence agency has said it knows of at least 2,000 British-based individuals who pose a direct threat to national security because of their support for terrorism.

In 2005, four young British Muslims with links to al Qaeda carried out suicide bombings on London's transport network, killing 52 people.

(Editing by Mark Trevelyan)