Britain: Brown government set for conflict with public sector over pay and cuts

But the full scale of Brown’s attack can only be understood when measured against the threat of a global recession, accompanied by rising unemployment and inflation.

Brown prepared his announcement with a long and rambling interview in the January 6 Observer, in which he admitted his fears of a major downturn in the world economy

This was, he said, “one of the most difficult years for the world economy. There’s absolutely no doubt, no doubt about it. We’ve seen a credit crunch. It obviously started in the United States of America. But the global nature of financial markets means that it spread right across Europe and has got an impact on all the major industrial economies as things stand. It is combined with the uncertainty about the international situation that has produced very high and rising oil prices and commodity prices.”