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World News

UK PM Brown's speech to the City on the economy

LONDON (Reuters) - Prime Minister Gordon Brown gave a speech at Thomson Reuters on Wednesday and answered questions on the economy.

Following are key quotes from Brown’s appearance:

ON EUROPEAN ECONOMY

“It’s pretty obvious what’s happening. The European economy which is our major source of growth is not growing fast enough.”

ON IMBALANCES

“Clearly there are issues about currency imbalances, there are issues about trade imbalances, there’s issues about the excessive holding of reserves by certain countries -- all these things are holding back the growth that we need to see in the world economy.”

ON DEFICIT/CREDIT RATING

“This four-year deficit reduction plan, legally binding, legislated in parliament, is I think very clear and I think the markets should understand this.

“Our debt is structured in such a way that the average maturity is about 13 years. It’s a lot longer maturities than any of the debt you are dealing with in other countries.

“We’ve been able to finance it on that basis without the same amount of rollover that’s needed by other countries. I would also say the cost of financing this debt is still lower than the cost of financing debt when we came into power in 1997.

“I believe we will maintain that credit rating.”

ON GROWTH

“The budget will focus on protecting and advancing the recovery - on how we protect our children’s and young people’s economic futures by ensuring that Britain can succeed in the new industries and new jobs of the future global economy.

“For the final essential element of our plan to reduce the deficit is a determination to get the economy growing faster.

ON ENERGY/TRANSPORT

“This belief in Britain’s future is why we will propose in the budget new frameworks to stimulate nuclear and clean energy generation.

“And this belief in Britain’s future is why we will later this week set out proposals for investing in high speed rail.”

ON TRADE

“A world trade deal, which is within reach, would be worth $170 billion annually, and would ensure no backsliding toward the protectionism.”

ON RECESSION

“While we were hit with a great recession we now know that the world has indeed avoided a great depression.”

ON BANKS

“The fact that banks are returning to profitability does not remove the need for them to become better capitalized over time. Nor does it dispense with the imperative, as we concluded in London, for enforceable international rules on capital and liquidity, leverage and resolution mechanisms -- or what we now call living wills.

“Of course, the timetable for the implementation of such rules must be carefully calculated and calibrated to the pace of recovery. The pace of deleveraging must be managed to ensure that businesses and employment can recover first.”

ON BANK LEVY

“We should seek consensus on a co-ordinated approach over the coming months, building on four key elements. First, that a levy on banks seems likely to be the most practical approach.

“Second, that the levy should be designed go with the grain of necessary regulatory reform not cut across or remove the need for it. Third, that the levy should support globalization and avoid double-taxation of international banks.

“And finally that proceeds should be for national governments to use, whether to put them aside in a dedicated insurance fund, to repay interventions or to reduce public debt.”

ON GLOBAL REFORM

“The risk is that despite the traumatic shocks of the last 18 months, the world will all too easily default to former patterns and failed pathways.

“I believe there is now a real risk that if no action is taken globally, either the global imbalances which were the background to last year’s crisis will re-emerge with a vengeance in 2011 and beyond, or the global economy will experience a lost decade of low growth and low employment.

“So we must now make a reality of the breakthroughs we agreed in Pittsburgh at the G20 ... We can not all export ourselves to sustainable growth. Now is the time to turn the blueprint into concrete action.”

ON PAY

“We will ... freeze the pay of senior staff in the civil service, senior staff in the military, the judiciary, senior managers in the health service and the pay of consultants, GPs (family doctors) and dentists.

“These measures along with the new controls on senior pay which I announced in December will save money immediately and by 2013/14 save more than three billion pounds.”

ON BUDGET/DEFICIT REDUCTION

“For the first time in British history, the government has made a tough legally binding commitment to reduce the deficit: a contract between the government and the British people.

“This contract says we will more than halve the deficit over four years, and we will also reduce the size of the structural deficit by two-thirds over the same period.

“We will set out in more detail in the Budget in two weeks’ time how we deliver on our commitment to restore the public finances while protecting the fundamental public services that we all depend on.

“But our approach is clear and we will not be diverted from it.”

ON RECOVERY

“Although the economy is growing, the recovery is still in its early stages and remains very fragile. There will be many months ahead of conflicting statistics, false hopes and mixed signals.”

“In my view we are nearly there in repairing the global financial system. But there is nothing pre-ordained or automatic about the upturn, either here or around the world. While we have come through the worst of this dreadful storm, The waters are still choppy, there are still real risks to the recovery and we must be alive to them.”

Reporting by Keith Weir, Matt Falloon, Jodie Ginsberg and Estelle Shirbon

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