Global Recession Emerged From US, Brown to Tell Congress

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the Guardian/UK

Global Recession Emerged From US, Brown to Tell Congress

PM pinpoints poor regulation and sub-prime crisis in America as being at the root of economic crisis

by
Patrick Wintour and Andrew Sparrow

A statue of George Washington stands in the snow in front of the New York Stock Exchange. A pall of economic gloom hung over President Barack Obama's talks with Prime Minister Gordon Brown, who came armed with a plan for huge reforms of the reeling global finance system. (AFP/Getty Images/Mario Tama)

Gordon Brown
will reject the calls of cabinet colleagues to accept responsibility
for the economic crisis when he makes a landmark speech to the US
Congress tomorrow.

In the speech, the fifth by a serving British
prime minister to both houses on Capitol Hill, Brown is in no mood to
admit that the British government bears any responsibility for the
crisis, insisting it is a banking failure caused by lack of regulation
in the US and the rise of sub-prime mortgages.

In an interview in the Daily Telegraph today,
the chancellor, Alistair Darling, acknowledged there were "a lot of
lessons" to be learnt from a "culture" of limited regulation that
encouraged bankers to take risks. Ed Balls, the schools secretary and
another close ally of Brown, also admitted "it is clear we were nowhere
near tough enough". The comments chime with criticism by Lord Turner,
chairman of the Financial Services Authority.

But Brown insists
this is not a typical recession caused by a government allowing
inflation to rear out of control, and is instead the product of the
failure of an international regulatory system to stay abreast of
globalisation.

In an interview with National Public Radio this
morning, Brown said the global banking collapse needed a global
solution. He called for the same standards in banking "of remuneration,
accountability, transparency and disclosure all round the world",
saying it would lead to a restoration of confidence in banking.

Brown will today hold nearly two hours of talks with Barack Obama
at the White House, and take a few questions from reporters. But he is
not getting the full-scale press conference with the new president that
had been expected by Downing Street. The decision was interpreted as a "snub" in some quarters of the British media, where it was noted that the president was due to find time for a meeting with the Boy Scouts of America this afternoon.

The
prime minister's officials played down the significance of the
decision, which has taken some of the lustre off his coup in becoming
the first European leader invited to Washington for talks with Obama
since his inauguration in January.

However, Obama's team pointed
out that the busy president did not hold a press conference after
meeting the Japanese prime minister, Taro Aso, last week.

A
Downing Street spokeswoman said this morning: "We always said that a
media event was planned and that's what will happen. The White House
will confirm details in the course of the day."

Brown will attend
around 45 minutes of talks in the Oval Office followed by a working
lunch with the president and his officials.

In his radio
interview Brown declined to endorse Obama administration projections
that an economic recovery would start strongly next year. "The level of
international cooperation achieved in the next few weeks may dictate
how quickly we come out of this downturn," he said.

"We are about
to put in perhaps the biggest fiscal stimulus the world has ever seen
... and the biggest cut in interest rates the world has probably ever
seen. If we can follow that up with greater international cooperation
that can make a big difference to our chances of recovery quickly."

ABrown sidestepped questions on whether he had allowed too much personal debt to pile up in the UK.

On
Afghanistan, he said the war had changed in two respects: the Taliban
were now operating over the Afghan border in Pakistan and the coalition
forces were being attacked in a guerrilla campaign using roadside
devices. He said there were as many as 2,000 terrorists who used to be
in Afghanistan operating in Pakistan, "so we cannot solve the problem
without looking at what is happening in Pakistan".

He said
Britain had already increased its troop levels, implying there was no
need for a further British increase beyond the 8,200 troops operating
in Afghanistan already. He also called for a stronger central
government in Afghanistan and said he was convinced that the Pakistani
government was determined to root out terrorism.

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