Brown: I'll keep lid on public sector pay

Gordon Brown gave his first warning of this summer's tight public spending round today with a stark message that he would not tolerate inflationary pay awards in the public services.

The Chancellor told business chiefs that trade union militants would not be allowed to win high pay rises despite their threats of widespread strikes.

Delivering a keynote speech to the British Chamber of Commerce, Mr Brown demanded that both the public and private sectors demonstrate discipline on salary deals.

He sought to build on yesterday's announcement of low inflation with a warning that irresponsible action would jeopardise Britain's hard-won platform of economic stability and put jobs at risk.

Mr Brown said: "I can tell everyone who depends on a wage or salary that under our new model of Bank of England independence, inflation is now less than two per cent and it is set to be just two per cent in the next and subsequent years."