UK loans get a Brown guarantee

UK Prime Minister Gordon Brown pledged to guarantee 21.3 billion pounds of loans to companies, as European leaders acknowledged the failure of bank bailouts and spending plans to contain the recession.

Brown's plan, coming the day after German Chancellor Angela Merkel announced a similar 100 billion-euro fund, underscores the urgency of reviving credit to limit unemployment and sustain consumer spending.

"What governments in Europe are learning is that you have to take action, because if you allow the market to take its course, the consequences could be quite dire," said Peter Dixon, an economist at Commerzbank AG in London. "This is the mood we are in at the moment, to absorb huge amounts of bad liabilities in the private sector onto the public-sector balance sheet."