Britain's ruling Labour party won't make any irresponsible spending pledges in its election manifesto, finance minister Gordon Brown said on Monday. Facing accusations that borrowing is running out control and taxes will have to rise if as expected Labour wins an unprecedented third term in an election likely in May, Brown said the government would continue meeting its fiscal rules. "In the coming few years our public spending discipline will not waiver. We will meet and continue to meet our fiscal rules," he said in a speech at a conference in London.

"There will be no relaxation of that discipline in our election manifesto. Priorities will be rigorously selected and pursued. And there will be no short cuts or easy options adopted in the maintenance of fiscal prudence."

But earlier on Monday, the National Institute of Economic and Social became the latest forecaster to say that Brown was in danger of breaking his own "Golden Rule" - that he only borrows to invest over the economic cycle.

"In the absence of a fiscal tightening in 2005-06, there is only a 20 percent chance that the Golden Rule will be met," the NIESR said in a report. Brown could declare the cycle over this March and raise his chances of meeting the rule but only to 50-50, NIESR said.

The respected think tank's warning echoed similar comments from the Institute for Fiscal Studies last week and the opposition Conservatives have seized upon such warnings to claim that taxes would go up under Labour.

They, on the other hand, are promising lower taxes if elected by finding savings from reducing government bureaucracy.

Recent data, however, have gone the Chancellor of the Exchequer's way. Data for the fourth quarter showed the economy bounced back, bringing 2004 growth in line with Brown's forecast, while even the public finances showed some improvement in December.

Copyright Reuters, 2005