LONDON: Britain faces an "enormous economic challenge" in 2009 but it must also grasp opportunities for future growth, Prime Minister Gordon Brown said on Thursday.

The year ahead "won't be easy," Brown warned in a New Year's message, but he voiced optimism that people would respond to the challenge.

"We can meet the security challenge, the environmental challenge and the enormous economic challenge," he said.

Britain is sliding into recession after being hard hit by the credit crunch. The economy contracted at its sharpest rate since the early 1990s in the third quarter of 2008.

Brown's government has been forced to step in to nationalise two banks and to take stakes in several others.

The scale and speed of the global financial crisis had been almost overwhelming at times, Brown said, leaving people "bewildered, confused and sometimes frightened."

Brown, long a champion of "light-touch regulation" for London's financial district, said 2008 was the year in which "an old era of unbridled free market dogma was finally ushered out."

He said that, despite the downturn, there were great opportunities, singling out the technology, environment and transport sectors as potential growth areas.

"We must prepare ourselves for these massive opportunities as the world economy doubles in size over the next two decades," he said, pledging to work with U.S. President-elect Barack Obama to create a "global coalition" to tackle climate change.

In a thinly veiled attack on the Conservatives, Brown said governments in previous downturns had cut back investment. "This will not happen on my watch," he said.

CLASH WITH CONSERVATIVES

Brown is spending billions of pounds on an economic stimulus plan that will sharply increase government borrowing. The Conservatives, ahead in the opinion polls, attack Brown's spending plans as unsustainable.

In his New Year's message, Tory leader David Cameron accused the government of wasting billions of pounds on "useless schemes" such as a temporary cut in sales tax.

Cameron said the Conservatives must offer constructive ideas to help keep people in work and in their homes and to make sure the recession is as "short, shallow and painless as possible."

The Archbishop of Canterbury, Rowan Williams, focussed on moral aspects of the financial crisis in his New Year's message, to be broadcast on BBC television on Thursday.

The spiritual head of the Anglican Church acknowledged that many people felt anxious and insecure about the coming year because of fears about disappearing savings, lost jobs and home repossessions.

But he added: "Our hearts will be in a very bad way if they're focussed only on the state of our finances. They'll be healthy if they are capable of turning outwards, looking at the real treasure that is our fellow human beings," he said.

Williams has previously called the credit crunch a reality check for people preoccupied with material wealth..

 

Source : Reuters