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PM 'regrets' Tory economy attack PM 'regrets' Tory economy attack
(10 minutes later)
Gordon Brown says he is disappointed by "partisan talk" after the shadow chancellor warned his actions could lead to sterling's collapse.Gordon Brown says he is disappointed by "partisan talk" after the shadow chancellor warned his actions could lead to sterling's collapse.
George Osborne told The Times the PM's willingness to borrow his way out of trouble was "irresponsible". George Osborne told the Times the PM's willingness to borrow his way out of trouble was "irresponsible".
Sterling has fallen sharply in recent weeks amid fears about a UK recession.Sterling has fallen sharply in recent weeks amid fears about a UK recession.
Speaking in Washington, Mr Brown said: "We are taking the policy that is absolutely essential to take people through these difficult times."Speaking in Washington, Mr Brown said: "We are taking the policy that is absolutely essential to take people through these difficult times."
He said: "I now regret the partisan talk from the opposition."He said: "I now regret the partisan talk from the opposition."
Mr Brown is attending the G20 summit of the world's leading economies this weekend.Mr Brown is attending the G20 summit of the world's leading economies this weekend.
He added: "I believe that at a time when nations are coming together all over the world to deal with these problems, I think people are looking to politicians to be responsible and to show leadership." He said: "At a time when nations are coming together all over the world to deal with these problems, I think people are looking to politicians to be responsible and to show leadership."
He said his actions had been backed by the Governor of the Bank of England who had "made it absolutely clear that it is not only right to cut interest rates, but it is perfectly reasonable to have a fiscal stimulus".He said his actions had been backed by the Governor of the Bank of England who had "made it absolutely clear that it is not only right to cut interest rates, but it is perfectly reasonable to have a fiscal stimulus".
Labour accused Mr Osborne of "talking down" the economy, but a former advisor to three Thatcher chancellors said he had been right to raise the issue. The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems George Osborne The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems George Osborne
On Friday, the pound slipped to a 13-year low against a basket of other currencies, hovered near a six-and-a-half year low against the dollar, and traded at a near-record low against the euro.On Friday, the pound slipped to a 13-year low against a basket of other currencies, hovered near a six-and-a-half year low against the dollar, and traded at a near-record low against the euro.
Mr Osborne says the more the prime minister borrows, the less attractive the currency will become. Mr Osborne said the more the prime minister borrowed, the less attractive the currency would become.
He told The Times: "We are in danger, if the government is not careful, of having a proper sterling collapse, a run on the pound." He told the Times: "We are in danger, if the government is not careful, of having a proper sterling collapse, a run on the pound."
He said that would push up long-term interest rates, "which is a huge burden on the economy".He said that would push up long-term interest rates, "which is a huge burden on the economy".
"The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems.""The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems."
'Panicky' criticisms 'Undermines confidence'
He went on to label Mr Brown's tactic as a "scorched-earth policy", which a future Conservative government would have to clear up.He went on to label Mr Brown's tactic as a "scorched-earth policy", which a future Conservative government would have to clear up.
"His view is he probably won't win the next election. The Tories can clear this mess up after I've gone," he said."His view is he probably won't win the next election. The Tories can clear this mess up after I've gone," he said.
A Labour spokesman said George Osborne was making "panicky" criticisms "in a desperate last throw of the dice to save his career". George Osborne suggests Gordon Brown does not care about debt
Labour MP John McFall, who chairs the Commons Treasury Committee, told the BBC that Mr Osborne's comments were "very dangerous": Labour has accused Mr Osborne of "talking down" the pound, but the Tories said he was the shadow chancellor and meant to give a critique.
Conservative MP John Redwood, who chairs the Tories' policy group on economic competition, told the BBC: "Part of the reason it's been falling is the loose and careless remarks of government ministers and the governor of the Bank of England, because they in power can move markets.
"And part of the reason for the sharp decline is overseas investors losing confidence in Britain because they think this government is borrowing too much."
'Intellectual confusion'
Labour MP John McFall, who chairs the Commons Treasury Committee, told the BBC that Mr Osborne's comments were "very dangerous".
"We have abormal economic times here," he said."We have abormal economic times here," he said.
"You can witness that by the G20 meeting in Washington this weekend and George Osborne is running the risk of a run in sterling or making false predictions if and when sterling recovers.""You can witness that by the G20 meeting in Washington this weekend and George Osborne is running the risk of a run in sterling or making false predictions if and when sterling recovers."
And Liberal Democrat shadow chancellor Vince Cable said Mr Osborne's criticism signalled "massive intellectual confusion" within the Conservatives over fiscal policy. Liberal Democrat Treasury spokesman Vince Cable said Mr Osborne's criticism signalled "massive intellectual confusion" within the Conservatives over fiscal policy.
He said: "For the last decade, the Conservatives have been rubbishing the idea of Britain joining the euro on the basis that we need to have a flexible exchange rate, yet when we have a flexible exchange rate, they complain because it's flexible."He said: "For the last decade, the Conservatives have been rubbishing the idea of Britain joining the euro on the basis that we need to have a flexible exchange rate, yet when we have a flexible exchange rate, they complain because it's flexible."