Former Premier David Saul told a meeting last night that the last time the US was in a serious recession, Bermuda responded by cutting Government spending, including freezing MPs' salaries.

Dr. Saul, speaking a day after it was revealed that MPs are to vote on whether to give themselves a 30 percent pay rise, said that in a time of financial crisis "the first thing you do as a government is to control government spending".

He said that in the early 1990s, when he was Finance Minister, he had to act to protect Bermuda from the fallout from the American recession.

Some of the measures he took included freezing the hiring of civil servants and freezing MPs' salaries. "A topical thing today, but it was done," he told an audience at Pembroke Sunday School.

"In 1990, we were all in a mild panic. That was almost 20 years ago. How quickly human beings forget."

Former UBP politician Dr. Saul was speaking at the second economic forum organised by Imagine Bermuda to look at how the Island could be affected by the global economic downturn.

Antoinette Bolden, head of Emerald Financial, said Bermuda's small size meant it could adapt quickly to change and that would help it survive.

She said that though the insurance industry was a great pillar of Bermuda's economy we should start looking beyond it for other ways to make a living. "Some of us may have to retrain," said Mrs. Bolden. "Do we keep steering our kids towards the insurance industry?

"There is always going to be a need for insurance but I think it's going to be radically different than what we have today."

Financial journalist and former chartered accountant Roger Crombie predicted that some of the new hotel developments, including the Park Hyatt at the old Club Med site, might not happen.

He said Americans made up the bulk of our tourists and they would not be travelling. How, he asked, would developers manage to borrow millions of dollars from banks with no money to build hotels which no one would stay in.