LONDON, Oct 1 (Reuters) British Prime Minister Gordon Brown said today there would be no government spending splurge as speculation grows that he will soon call a snap general election.
In a speech at the Reuters headquarters in London alongside former US Federal Reserve chairman Alan Greenspan and British finance minister Alistair Darling, Brown said his government would not relax its fiscal discipline for any short-term gain.
To emphasise that point, he placed his personal clout behind a 32 billion dollars project to build a new rail link across London but said it would only go ahead if business paid its fair share.
Crossrail, which would be one of Britain's biggest ever building projects, was first proposed by in the mid-1980s, but has since produced nothing more than endless planning and committee meetings and parliamentary debates despite business clamour for it to ease London's clogged transport network.
''A comprehensive package is now needed to fund the 16 billion pounds required, largely from the public sector but also from the proceeds of the business rate and a contribution from certain London businesses and developers who will be benefiting significantly from Crossrail,'' Brown said.
The government's pre-budget report and spending review this month are expected to maintain tight expenditure limits but cuts in both personal and corporation tax will take effect next year.
''There will be no irresponsible relaxation of pay discipline in the public sector, no unfunded spending commitments, no unaffordable promises, no short-term giveaways,'' Brown said.
''A responsible government demands that stability will be our determination first and foremost yesterday today and tomorrow.'' His declaration comes after the opposition Conservative party pledged at the start of their annual conference to scrap duty for first-time buyers of homes costing less than 507,700 dollars.
Conservative leader David Cameron has also floated possible cuts in family taxes which would be paid for by ''green taxes'' such as a pollution duty on airlines, in a sign the opposition party could try to make tax a central electoral issue.
POLL LEAD Brown's Labour party is running far ahead of the Conservatives in the polls, raising expecatations that the new prime minister could call an election as early as October 25 or November 1, nearly three years earlier than he is required to.
''It's still in the balance,'' said one source close to Brown.
Opinion polls suggest the government's popularity has not been dented by last month's Northern Rock crisis when there was a run on the bank after it sought emergency cash from the Bank of England.
But a survey on Friday showed consumer confidence plunged in the wake of the first British bank run in more than a century.
Brown, who was finance minister for a decade before taking over from Tony Blair in June, said the British economy would survive the current storm in credit markets.
''A wave of turbulence that started in America then Germany has impacted on all countries and tested the stability of our own system,'' he said.
''I believe it's because of the resilience of the system that has been built in the UK ... that we were able to steer a stable course.'' Finance minister Darling will say at the same event that from today, the government will guarantee all bank deposits up to 35,000 pounds. Previously, only the first 2,000 pounds were guaranteed and then 90 percent of the next 33,000.
Darling will also set out Britain's thinking on how international financial regulation needs to be improved.
REUTERS SKB AS1436