Recession an opportunity, says PM

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The recession presents the UK with an "enormous opportunity" to reform its economy and become more competitive, Gordon Brown has insisted.

The prime minister said the country had to harness its "scientific, intellectual and cultural genius".

People were experiencing "real pain", but anti-downturn measures would reform banking and help the environment.

Chancellor Alistair Darling is expected to announce £15bn of spending cuts over the next few years in the Budget.

The money will come from Whitehall savings, it is understood.

But the Conservatives said Wednesday's Budget would be a "day of reckoning" for the government over its handling of the economy.

'Inherent strengths'

Mr Brown told the Building Britain's Future conference at Loughborough University that unskilled workers could face difficulty in finding a job in future, given the nature of the changes to the economy, with the UK creating "value-added" products.

On the downturn, he said: "These are changes that are global, that we have globally in concert with other countries to control."

The UK had to "build on our inherent strengths", the prime minister said, adding: "In this new competitive world we have got to do everything in our power to enable businesses to be internationally competitive. No policy can remain exactly as it was five or 10 years ago.

"Where there are difficulties there are opportunities. We have got to invest out of this downturn."

Working together we can meet and master any challenge Gordon Brown

Mr Brown said this had to include improving transport infrastructure and simplifying the planning process, and to "break down the barriers that prevent businesses getting on".

He added: "We have, in Britain, an open economy. We are one of the greatest free-trade economies of the world.

"We have a global reach, I think greater than any other country, to work with markets in any other part of the world...

"We have also got a scientific, intellectual and cultural genius. I believe we can harness these strengths.

"We have difficulties that we are overcoming, but we have also got enormous opportunities and challenges ahead. Working together we can meet and master any challenge."

Car scheme

Also attending the event, Business Secretary Lord Mandelson said: "We cannot have a government simply standing on the sidelines and allowing others to take over and beat us in this global race."

The Treasury has already said that there will be £5bn of savings in the financial year 2010 to 2011.

But Mr Darling is expected to say that another £10bn will be found from the 2011-12 financial year onwards.

Shadow chancellor George Osborne has said the Budget, expected to confirm a likely 3% fall in growth in 2009, will "lay bare" Labour's economic failings.

"It will be a day of reckoning and I think you are going to see the chancellor forecast the longest recession that Britain has had since World War II," he said.

In last autumn's pre-Budget report, the chancellor forecast the economy would contract by between 0.75% and 1.25% in 2009.

Meanwhile, the Ernst & Young Item Club has predicted that the UK economy will shrink by 3.5% this year - which would be the worst recession since 1945.

But this rate of decline should fall to 0.1% in 2010, it added.

However, Mr Darling is expected to say the economy will return to growth next year and gain further strength in 2011.

The CBI employers' group predicted a "slow and fragile" return to growth in spring next year.