Oct. 3 (Bloomberg) -- Prime Minister Gordon Brown's government brought forward plans to boost the backing for U.K. bank deposits after a stronger guarantee in Ireland prompted British savers to move their funds abroad.

The U.K. bank regulator raised the value of deposits it insures to 50,000 pounds ($88,500) from 35,000 pounds, scrapping a three-month consultation with banks on the issue. Some British savers sought sanctuary in Irish banks after Sept. 29, when the government in Dublin guaranteed 100 percent of deposits.

The steps were taken ``in the interests of providing clarity,'' said Hector Sants, chief executive officer of the Financial Services Authority. ``We have now decided to implement the move to a 50,000 limit.''

Brown is seeking to show voters he has a plan to deal with the biggest market turmoil since the 1930s as frozen global credit markets restrain activity. Bank of England Governor Mervyn King pumped $40 billion into credit markets and pledged to do what it takes to restore calm.

Brown also revamped his Cabinet and named a panel of 17 executives to advise government, saying a new National Economic Council will meet twice a week until the crisis is over.

``These aren't ordinary times,'' Brown told reporters in London today. ``We're in new times. We're living through the first truly global financial crisis.''

Banking Bill

Brown, who had hoped to hold off on the changing the deposit guarantee until Parliament reviews banking legislation due to be introduced next week, pressed Irish and other European governments to ensure that the decision made in Dublin doesn't exacerbate pressure on the British banking system.

In Dublin, Irish government minister Martin Mansergh, a junior official in the finance department, rejected Brown's criticism and said ``national governments have the primary role in resolving the crisis'' and not ``grand European solutions.''

Britain's Chancellor of the Exchequer Alistair Darling will introduce a new banking regulation bill to Parliament on Oct. 6 and begin debating its contents a week later. The FSA said it will consider further changes, including another increase in the compensation limit.

Earlier this week, Brown indicated no changes to the deposit guarantee would be made until new banking legislation wins approval from Parliament in the next few months.

Government Guarantee

Banks in the U.K. say a decision by the Irish government to guarantee all bank deposits will distort competition at the same time authorities are struggling to cope with a seizure in global credit markets.

Britons are increasingly nervous about their savings after the government brokered a takeover of HBOS Plc, the country's biggest mortgage lender, and seized control of Bradford and Bingley Plc's mortgage unit.

The government already guarantees all savings at Northern Rock Plc, the mortgage lender nationalized in February although savers in other banks are increasingly worried about the safety of their money. Earlier this week, Northern Rock shelved some of its savings accounts after cash flowed in, prompting rivals to complain it was distorting competition.

Brown wants Dublin authorities to prevent Irish companies using the guarantee to lure British customers. A spokesman for the prime minister's office said British officials have been in close contact with Irish colleagues and other European partners about the ``impact on the single market.'' He praised the European Union's decision to review the matter.

Summit Meeting

Brown is due to meet leaders of France, Italy and Germany tomorrow about how to respond to the credit this weekend. The FSA will also examine whether separate accounts within the same banking group can be covered.

Britain's Post Office, whose savings products are backed by the Bank of Ireland, has also reported a rise in the number of customers seeking to invest.

Also today, the Bank of England said it will extend the range of collateral it accepts in its auctions of three month funds as it seeks to end ``extraordinary'' strains in money markets. The action had little effect on markets as rates jumped to record highs.

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in euros climbed to 5.33 percent today, an all-time high, the British Bankers' Association said.

Cabinet Team

The new ministerial, led by Brown and Darling, committee set up to monitor economic activity will meet for the for the first time at 11 a.m. in London on Oct. 6.

``We will continue to take action that helps the markets in general,'' Darling said today as he stood alongside Brown. ``I mean it when I say I will do whatever it takes. Both these actions demonstrate our commitment to stability.''

The banking reform bill will give the Treasury additional powers to force banks to pay for the scheme upfront.

While the increase was expected, the FSA dispensed with its normal consultation process to introduce it, citing a waiver that permits emergency rules if a delay ``would be prejudicial to the interests of consumers.''

To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.netCaroline Binham in London at cbinham@bloomberg.net.

Last Updated: October 3, 2008 12:52 EDT