Brown blames banks for the credit crisis as he warns of tough times ahead

Gordon Brown blamed the economic downturn on financial institutions today and warned the international credit crunch will continue to bite.

At a private meeting at Goldman Sachs in London this afternoon the Prime Minister said inadequate banking practices are to blame for gloom in the markets.

And he signalled that the battle against global economic turmoil was far from won, saying: 'There are still difficulties ahead.'

He spoke after it was revealed the Bank of England had promised to inject an extra £15billion into the financial system.

Mr Brown said: "People will probably look back to say this is the first financial crisis of this new era of globalisation.

"And behind this lies the under-pricing and under-reporting of risk and off-balance sheet activities, inadequate credit rating services and more recently the failure to disclose, in a thorough and systematic way, write-offs.

"All have served to reduce confidence in a global economy that has moved from risk taking to aversion to risk.'

Last night, in an interview with the Prime Minister on the CBS news in the US, Mr Brown added: 'My own view, having been a finance minister before prime minister, is we can act quickly to deal with the problems.

'We know what to do with disclosure, oil prices, food prices, better global supervision, better free trade agreement. All these things will contribute to building confidence that we might move forward.'

But finance chiefs have accused the Prime Minister of trying to deflect voters' anger away from Labour ahead of May's London mayoral and local elections.

Ahead of a meeting between Mr Brown and the chief executives of Barclays, HBOS, HSBC and the Royal Bank of Scotland this morning, one bank boss said: "The whole thing about passing on base rate cuts is an attempt to shift the blame."

Another said: "There are elections in May and there needs to be some words directed at the banks."

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They point out that state-owned Northern Rock has not yet cut its lending rates following the cut in interest rates to five per cent last week.

They were expected to call on the Government to act to swiftly unblock the money markets following the drying up of inter-bank lending which has lead to higher mortgage rates.

Finance bosses want the Bank of England to follow other central banks, including the Federal Reserve in America, by accepting mortgage-backed securities as co-lateral in exchange for government-backed bonds.

There has even been talk of the Bank of England buying mortgage-backed securities.

After the meeting, a spokesman for the Bank of England said: 'The Bank of England is today injecting an additional £15billion liquidity into markets, taking its total injection over recent months to more than £50billion.

'We have been working with the Governor for some time on further proposals to support the financial system and to help the functioning of the money markets.'

However, the Conservatives sought to keep the focus of Britain's economic problems firmly on Mr Brown.

Shadow chancellor George Osborne claimed the Prime Minister's economic reputation was "in tatters", after an opinion poll found more than two-thirds lacked confidence in the Government's ability to deal with the current turmoil.

Downing Street has denied the meeting with City chiefs at No10 is a crisis meeting and points to an International Monetary Fund forecast that Britain will enjoy stronger growth this year.

The meeting come ahead of Mr Brown's trip to the United States tomorrow where is to meet leading figures from Wall Street to discuss the global financial crisis.

Last night an interview with the Prime Minister was broadcast on the CBS news. Mr Brown told presenter Katie Couric that he was "very pro-American" and that Britain's relationship with America was "very special".

He also urged for reductions in the price of oil and food, and called on the big banks to be clear about their "off-balance sheet debts".