But British prime minister still faces potentially deep recession
-- Crisis apparently brings out the best in Gordon Brown.
Britain's prime minister was virtually left for dead just a month ago. Unable to quell dissatisfaction in his own Labour Party over a string of by-election defeats and increasingly abysmal polls, it appeared just a matter of time before itchy Cabinet members and fearful back benchers moved to oust the dour Scot.
But if a rapidly sinking British economy was a big part of Brown's problem, it was the transformation of global gloom into a full-blown international financial crisis that granted him an opportunity to halt his slide.
It's premature to call it a bounce, but recent polls show Brown and his Labour Party regained some ground.
A YouGov poll published Sunday saw Labour favored by 33% of British voters, up three points, while the opposition Conservatives declined by an equal amount to 43%. Brown and his team bested Conservative leader David Cameron and his colleagues 33% to 27% when voters were asked who they trusted to handle the financial crisis.
"He's in his comfort zone talking about the economy to the public. It's what he did for 11 years," said Julia Clarke, head of political research at polling firm Ipsos MORI. Brown, who took over the top job from Tony Blair last year, was the most popular chancellor of the exchequer, or finance minister, since World War II, she noted.
Of course, a prominent role on the world stage in the middle of collapsing markets doesn't hurt either.
The British government's plan to directly inject capital into troubled banks and effectively guarantee interbank lending became the uniform model eventually adopted by European countries after piecemeal responses to failing banks added to financial turmoil.
Brown even jetted into Paris on Sunday to outline his plan to leaders of the 15 nations that share the euro -- a club that doesn't include Britain.
On Tuesday, the Bush administration formally announced it would follow Britain's lead as well, injecting $250 billion into troubled banks. See full story.
U.S. Treasury Secretary Henry Paulson's favored approach -- buying up toxic assets -- is still in the mix. But it plays second fiddle to recapitalization, the prescription favored by many but not all economists as a more direct and likely more taxpayer-friendly approach.
That's won Brown kudos.
His government "has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions. And this combination of clarity and decisiveness hasn't been matched by any other Western government, least of all our own," wrote economist Paul Krugman, the newly minted Nobel laureate, in his New York Times column Monday, noting that only time will tell whether the approach will do the trick.
Brown's avoided gloating, but Chancellor of the Exchequer Alistair Darling was quick to note the British plan's role in forming "the basis of an international consensus" in the House of Commons on Monday.
The prime minister has left it to allies to remark on his growing international reputation.
"It's very striking that it's the British prime minister ... that now is in demand as the person they believe at the moment who has the right instincts and is beginning to put forward a policy which could credibly begin to tackle this crisis of confidence," said Shaun Woodward, the Northern Ireland secretary, in a Sunday interview with Sky News.
But if financial markets stabilize, any warm feelings may be short-lived. The bailout is a huge undertaking in itself. A potentially deep and long-lasting recession looms, economists say. Unemployment is just beginning to pick up and could soar in coming months as house prices plunge, the world economy slows and debt-heavy consumers pare spending.
"Consumer spending in the U.K. looks likely to be very weak as households rebuild their financial positions, and this is likely to keep housing activity subdued, even when mortgage availability improves," wrote David Page, economist at Investec Securities. "We fully expect the U.K. economy to suffer its first recession in 17 years."
Recessions aren't usually favorable environments for incumbent politicians. Brown and the Labour Party must face an election no later than 2010.
Citing the crisis conditions, Conservatives largely have support for the government's rescue efforts. But they appear ready to begin criticizing Brown and company once markets appear stable.
On Monday, Conservative shadow chancellor George Osborne took aim at the price tag for the U.K. plan, lamenting that British taxpayers are left to on the hook for 37 billion pounds.
Conservatives will likely resume attacks on Brown's tenure, saying he allowed government spending to get out of control while running the Treasury, and that he weakened regulatory oversight of the financial sector.
"He will have to fight tooth and nail to remain on this regained ground," Ipsos' Clarke said. End of Story
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