Prime minister announces pay freeze for doctors, dentists and hospital consultants as well as senior managers across most of the public sector

Gordon Brown drew the election battle lines around the economy today, announcing a freeze on public sector pay and declaring he had the strength of character to lead the country to recovery.

Brown stressed that the country was at a "crossroads" and faced "crucial decisions" in the months ahead. He warned that "ideologically-driven" Tory plans for cuts risked tipping the country back into recession.

The prime minister said he would save £3bn by freezing pay for doctors, dentists, and hospital consultants as well as senior managers across most of the public sector.

Brown also used his address to confirm that the budget will be in two weeks' time, on 24 March, leading to speculation that he will announce the date of the election on 6 April.

Speaking at Thomson Reuters in Canary Wharf, the same venue where the Tory leader, David Cameron, attacked Labour's record on the economy last week, Brown said the "resolve" and urgency felt during the 2008 banking crisis needed to be displayed again now.

He admitted that in hindsight it was now clear just how close the world economy came to "economic meltdown".

The economy remained in "choppy waters", said Brown as he cautioned against any belief that the recovery would automatically continue.

"In my view we are nearly there ... but there is nothing preordained or automatic about the upturn either here or abroad," he said.

Brown turned the tables on those who accuse him of lacking character by insisting that the past 18 months had been a period demanding the "greatest test of character" as the country was brought through a "dreadful" economic storm.

The prime minister said: "I have heard people say it is about policy and I have heard other people say it is about character. But I don't think you can separate the two. It is for other people to judge.

"But I believe that character is not about telling people what they want to hear but about telling them what they need to know. It is about having the courage to set out your mission and take the tough decisions and stick to them without being blown off course, even when the going is difficult."

He told the audience that tough decisions needed to be made to keep the economy on course to recovery.

He said: "We face crucial decisions. The stakes are high. We dare not risk the recovery. We are weathering the storm and now is no time to turn back. We will hold to our course and will complete our mission."

This included a "disciplined approach" to pay and benefits right across the public sector.

Speaking on the day that the senior salary review bodies publish their recommendations for public sector pay rises, Brown announced he intended to freeze the pay of senior staff in the civil service, the military, the judiciary, the health service and the pay of consultants.

Salaried GPs and dentists – those employed by hospitals or other GP/dentist contractors – will receive a 1% pay rise, while contractor dentists and GPs – those that run practices and may employ other people – will in effect have their pay frozen.

Brown said that the government remained committed to halving Britain's record £178bn deficit within four years and said the curbs on public sector pay would save more than £3bn by 2013-14.

The government has decided to accept some, but not all, of the review body's recommendations.

It ignored a recommendation to increase the minimum pay for senior civil servants by £2,300 to £61,500 and has also rejected a recommendation to increase the pay for NHS managers earning less than £80,000 by 2.25%.

The announcement is likely to provoke fury among public sector unions just days after it was announced that MPs would see an automatic rise of 1.5% in their pay.

The FDA, which represents senior civil servants, described the decision as an "insult" to hardworking staff.

Brown reminded his audience that he had already ruled that government ministers would eschew pay increases of any kind next year.

The prime minister also stressed that, while the worst of the recession was over, the economic recovery remained "fragile" and could be undermined if spending cuts were pushed through too quickly.

Brown emphasised the need to ensure the recovery was balanced and sustainable on a global basis as he called for the G20 to inject "new urgency into the delivery of the international agreements we have reached".

He said: "I believe that around the world we have to rediscover that sense of urgency and collective ambition that guided us a year ago. For it is our choices – and the wisdom, resolve and judgments we bring to bear in making them, at both a national and global level – that will determine whether we secure a lasting recovery and indispensable reforms to safeguard our economic future."

Vincent Cable, the Liberal Democrats' Treasury spokesman, said: "Gordon Brown's speech shows he is leading with a weak hand.

"It's very difficult to see how the man who claimed to have abolished boom and bust can campaign on his stewardship of the economy after the greatest bust for decades. The only reason he is, of course, is because the Conservatives are even worse."

He added: "The budget must clearly spell out where Labour intend to make spending cuts in order to tackle the budget deficit."

Russian oligarch awarded damages over claims he arranged polonium poisoning of friend and former spy

The exiled Russian oligarch Boris Berezovsky was today awarded libel damages of £150,000 over "savage" allegations he was behind the murder of Alexander Litvinenko, the poisoned Russian dissident who was his close friend.

In a chaotic high court battle in London, the 64-year-old tycoon successfully argued his reputation had seriously been damaged by a Russian state television broadcast in April 2007.

The programme, available to view for free by satellite in the UK, included an interview with a man who claimed he had been offered £40m by Litvinenko – who was working for Berezovsky until his death – to falsely confess to being a KGB hitman tasked with killing Berezovsky with a poisoned ballpoint pen.

When he refused to take the bribe, the man said, he was drugged and then forced to make a false testimony used to bolster Berezovsky's asylum application in the UK.

The purpose of this lie-filled testimony, the man said, was to "prove" the oligarch would be in mortal danger if he returned to his homeland.

His evidence was indeed crucial in proving Berezovsky's political refugee status and he was granted asylum in 2003, the court heard.

In the same programme the presenter suggested that Litvinenko, who died from poisoning with radioactive polonium in London in November 2006, was killed at Berezovsky's behest because Litvinenko was a witness to Berezovsky's fraudulent claim for political asylum.

The logic was that Litvinenko would be an important witness for Russian prosecutors investigating allegations that Berezovsky's asylum was based on lies, and thus Berezovsky wanted him dead – just in case.

Berezovsky claimed he was a victim of "selective editing" after the programme began with a clip of him saying: "If I particularly dislike someone I'll kill him." The remark was clearly "ironic or jocular", said his barrister, Desmond Browne QC.

The oligarch pulled up to court most days during the trial in a blacked-out limousine and sat in court flanked by his security guards.

Giving evidence, he explained why he took action. "I cannot imagine a more offensive and damaging allegation. It would be damaging enough to allege merely that I bribed or drugged a man so as to force him to give false evidence in order to help me secure my asylum status; that I was accused of Sasha's [Alexander Litvinenko's] murder, and to think people may believe it to be true, was, and still is, deeply upsetting.

"I have been portrayed as a man whom people should fear; this affects my relationships with everyone who is not already a close personal friend."

In his judgment today, the judge, Mr Justice Eady, said: "I can say unequivocally that there is no evidence before me that Mr Berezovsky had any part in the murder of Mr Litvinenko. Nor, for that matter, do I see any basis for reasonable grounds to suspect him of it."

Berezovsky, who has an estimated wealth of $1bn (£667m) according to Forbes magazine, told the court that Litvinenko was a dear and loyal friend who had saved his life "on more than one occasion" – chiefly by refusing to assassinate him in 1998 when Litvinenko was an agent of the FSB, the security bureau that descended from the KGB.

The grateful Berezovsky then became Litvinenko's benefactor, arranging his family's escape to the UK. Once in London he gave Litvinenko a house and thousands of pounds a month in "research grants".

To back up his case, Berezovsky enlisted a roster of high-profile witnesses including Litvinenko's widow, Marina.

After Litvinenko fell ill in 2006 after ingesting a radioactive isotope in a London sushi bar, Berezovsky told British journalists that his friend had been poisoned because he was an enemy of the then Russian president, Vladimir Putin.

The two-week trial was almost anarchic at times as officials from the Russian prosecutors' office repeatedly intervened despite not being party to proceedings. So obvious was their intention that when one of their mobile phones went off in court one day, Browne quipped: "That must be Mr Putin on the line."

At least three Russian prosecutors were in court each day to assist Vladimir Terluk, the man accused of giving the contentious interview about Berezovsky's bogus asylum claim. They whispered in Terluk's ear, passed him notes and smirked or laughed as the evidence was heard.

At one point they asked for the opportunity to cross-examine Berezovsky. "I thought that a step too far," said Eady in his judgment.

Terluk, a Kazakh who came to the UK to seek asylum in 1999, had been left to defend the libel action alone and without a lawyer after the Russian Television and Radio Company refused to take part.

He denied being "Pyotr", the man in the offending broadcast, yet maintained that everything Pyotr said was true, including "that [Berezovsky's] associates tried to organised the falsification of the assassination plot with the purpose of obtaining refugee status by Mr Berezovsky and his associates … and the late Mr Litvinenko himself was the one who was trying actively to implement that falsification".

In his judgment, Eady said: "I have no doubt that Pyotr was indeed Mr Terluk and that he must have known he was being filmed." But Terluk did not himself accuse Berezovsky of murdering Litvinenko, which was, Eady said, "the overall message conveyed by the programme".

Moscow has made no secret of its desire to extradite Berezovsky, who has been an outspoken critic of the Kremlin since he fell out with Putin in 2000.

In April 2009 Russian prosecutors charged Berezovsky with "knowingly false denunciation of a involvement in a serious crime" – a charge peculiar to Russian law that relates to the allegedly fabricated evidence in support of his 2003 asylum claim.

One of the Russian prosecutors admitted to the Guardian he hoped Berezovsky would lose the case so his asylum status would be called into question by the Home Office and he would be returned to Russia to face trial.

They were also intent, Eady ruled, on blackening Litinvenko's character. "He was portrayed as something of a wild man. It was said that he was an unreliable fantasist who was prone to emotional outbursts." The purpose of this "wholesale attack", said Eady, was to undermine the credibility of evidence Litvinenko gave in support of Berezovsky's asylum claim.

Speaking after the judgment, Berezovsky said: "I have no doubt that, in making this programme the purpose of RTR and the Russian authorities was to undermine my asylum status in the UK and to put the investigation of Sasha Litvinenko's murder on the wrong track. I am pleased that the court, through its judgment, has unequivocally demolished RTR's claims. I trust the conclusions of the British investigators that the trail leads to Russia and I hope that one day justice will prevail."

He was not optimistic about the prospect of recovering the £150,000 damages but said: "This was never about money." Mr justice Eady said in his judgment that "the quanitification of the damages may be academic in the sense that there are likely to be formidable obstacles in recovering the money".

Berezovsky is no stranger to London's law courts. In 1997 he sued the US magazine Forbes after it printed an article that asked: "Is he the Godfather of the Kremlin?" He won despite only 2,000 copies of the 785,000 sold worldwide having been purchased in the UK.

That case is often cited as an example of libel tourism – foreigners taking advantage of England's libel laws, which tend to favour the claimant by putting the burden of proof on the defendant.

In 2008 he began a £2bn legal tussle with another London-based oligarch, Roman Abramovich, over allegations Berezovsky was forced to sell shares in a string of huge Russian state companies. He is currently fighting the widow of his friend and business partner Badri Patarkatsishvili for half of the dead man's fortune.

State department makes a point of thanking Conservatives as well as Brown government for role in transfer of policing powers to Stormont

David Cameron has been praised by the US administration for giving "strong support" to the deal between the Democratic Unionists and Sinn Féin that will see policing and criminal justice powers devolved to Belfast next month.

In an important boost for Cameron, who has faced criticism for forming an alliance with the anti-agreement Ulster Unionist party, the US state department made a point of praising the Tory leader for his constructive role.

Philip Crowley, a spokesman for the US state department, said last night: "Obviously, for a milestone like this, a number of players have played significant roles. We, the United States, including Secretary [of State Hillary] Clinton, have been actively engaged in helping Northern Ireland reach this point, as have a number of officials in the British government, including not only the Brown government but also the strong support that David Cameron and the Conservative party have given to the Hillsborough agreement."

The praise from the state department will be particularly significant because Crowley's remarks were scripted and were made in his opening remarks about Northern Ireland in the wake of the yes vote in the Stormont assembly yesterday.

Crowley gave a warm welcome to the overwhelming support for the final stage of the Good Friday agreement despite opposition from the 18 UUP members of the assembly.

Crowley said: "Devolution [of policing and justice] will mark a major milestone in achieving the aspirations of the Good Friday agreement, and the St Andrews agreement will help cement the hard-won gains over the past decade."

Washington had made clear to the Tories that it would make a point of praising Cameron, who issued strong support for the deal agreed between the DUP and Sinn Féin at Hillsborough Castle, County Down, last month. Cameron has faced criticism for interfering in the peace process by forming an alliance with the UUP, giving the struggling party the strength to oppose the policing vote.

Sir Reg Empey, the UUP leader, said he could not support the deal because he felt that the four-party power-sharing executive was not functioning properly. The UUP also criticised London for bullying their party.

George Bush, the former US president, telephoned Cameron last Friday to urge him to put pressure on Empey to endorse the deal. Congressman Richie Neal, the chairman of Friends of Ireland, today challenged Cameron to act as an "honest broker".

Cameron told Bush and US administration officials that he strongly supported the deal. But he said he could not force local parties in Northern Ireland to vote one way or the other.

AP - Corey Haim, a 1980s teen heartthrob for his roles in "Lucas" and "The Lost Boys" whose career was blighted by drug abuse, has died. He was 38.

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AP - Catholic authorities in Germany announced two major abuse investigations Wednesday — one into the renowned choir once led by Pope Benedict XVI's brother and another into what everyone, including the pope, knew about the sexual and physical abuse of students.