British economy remains sound - PM

He said low inflation meant the Bank was free to respond to worldwide financial turbulence by cutting interest rates. And he said families should be reassured there would be no return to crippling borrowing costs.

But in a sign of increasing concern over the global economy, the Prime Minister also disclosed he had had talks on the subject in recent days with German Chancellor Angela Merkel, French President Nicolas Sarkozy and EU Commission President Jose Manuel Barroso.

World economic stability also featured in a regular conference call between Mr Brown and US President George Bush.

The Prime Minister met Mr King, Mr Darling and Financial Services Authority chairman Sir Callum McCarthy over breakfast at Downing Street before facing reporters for his regular news conference.

"I heard from the Governor and the chairman of the Financial Services Authority that inflation has been brought down, and remains low, demonstrating that the fundamentals of the British economy are, and remain, sound," he said.

Mr Brown insisted inflation was lower in Britain than in the US or Europe, showing that measures this year - including controlled increases in public sector pay - had been effective.

"We stand able to weather the global financial storms and to respond where necessary, as the Bank of England has already done, with a cut in interest rates," he said.

He added: "What the British people need to know is that there's not going to be a repeat of the events of stop-go, boom and bust, that we had in the past.

"What they need to know is we are going to have low inflation and continue to have low inflation, that will keep interest rates down."