Britain can weather any global economic downturn, Gordon Brown told business leaders yesterday.

The chancellor used a speech to the Social Market Foundation to mount a new offensive to restore confidence in his management of the economy.

He also moved to clarify his stance on the limits of private finance in public services - putting himself at odds with the prime minister on the issue.

While he admitted that markets have a role, he added: "We must also have the courage to recognise where markets do not work.

"Our clear and robust defence of markets must be combined with a clear and robust recognition of their limits."

The shadow chancellor, Michael Howard, warned that private investors and pensions had been hit hardest.

"The Brown bear market represents investors' judgement on the performance of the chancellor. The reality is that people are suffering badly as a result of Gordon Brown's mismanagement of the British economy," he said.