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UPDATE 2-UK's Brown calls for plan on global imbalances

Published 11/23/2009, 10:44 AM
Updated 11/23/2009, 10:48 AM

* Brown pledges to keep economic stimulus in Britain

* G20 must tackle trade, currency imbalances-Brown

* Brown urges European leaders to launch growth drive (Updates with more quotes from Brown and Cameron)

By Adrian Croft and Fiona Shaikh

LONDON, Nov 23 (Reuters) - British Prime Minister Gordon Brown pledged on Monday to keep emergency support measures for the economy in place and appealed to world leaders to work together to tackle global imbalances that could hamper recovery.

Brown, who is counting on an economic upturn to boost his chances of winning an election due by next June, told business leaders that withdrawing stimuli too soon could undermine a recovery -- a view also expressed by International Monetary Fund chief Dominique Strauss-Kahn.

"Choking off recovery by turning off the life support prematurely would be fatal to world growth," he told the annual conference of the Confederation of British Industry (CBI).

"So that's why we will, like other countries, continue with our plans to support our economy until the private sector recovery is established," he said.

But opposition leader David Cameron warned the CBI that investors would lose faith in Britain's creditworthiness, doing more damage to the economy, if the overnment did not show determination to get a grip on public finances.

Brown said the Group of 20 major economies should come up with a strategy to tackle global imbalances in trade and currencies and oil price instability.

"If we are to have balanced and sustained growth that will keep unemployment low, we will have to address together ... a strategy for global growth," Brown said.

He did not single out countries but the United States has argued that an undervalued Chinese currency is exacerbating imbalances that were a root cause of the financial crisis.

Brown also urged European leaders to boost growth by encouraging private investment and doing more to break down barriers to cross-border business.

NEW STRESS ON GROWTH

While stressing his goal of cutting government borrowing, Conservative leader Cameron put a new emphasis on the need to spur growth, perhaps reacting to indications that the Conservatives' austerity plans were turning off some voters.

"Dealing with this deficit is not an alternative to economic growth -- the two go hand-in-hand," Cameron said.

"If investors see that there is no will at the top of government to get a grip on our public finances, they are going to seriously doubt our country's creditworthiness," he said.

A poll published on Sunday showed the centre-right Conservatives' lead over Labour slashed to six points, raising the possibility neither party might win a parliamentary majority at the next election.

That would be the worst-case scenario for financial markets, which fear the result would be a weak government incapable of taking decisive action to cut public sector borrowing, forecast to hit 175 billion pounds ($263 billion) this year.

Cameron pledged the Conservatives would introduce an "emergency growth budget" within 50 days if they won the election. It would contain a deficit-cutting plan as well as a plan to "unleash investment and enterprise", he said.

Britain lags many European rivals in emerging from recession. The British economy shrank by 0.4 percent in the third quarter, but the government still believes it will see growth by the turn of the year. (Editing by Stephen Nisbet) ((adrian.croft@reuters.com ; +44 207 542 7947; Reuters Messaging: adrian.croft.reuters.com@reuters.net)) ($1=.6645 Pound)

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