Downing Street Says

Asked if the Prime Minister was concerned about the fall in global stock markets, the PMS replied that what we had seen in relation to the volatility in the financial markets was clearly a global phenomenon originating in the US. The fundamentals of the British economy have remained sound, inflation was low, we had had 61 consecutive quarters of economic growth, and employment was at record highs. So both the Prime Minister and the Chancellor were clear that the Government would do everything in its power to maintain economic stability. That was why we had intervened for example to prevent the problems associated with Northern Rock spreading to other parts of the financial sector. It was also why for example we had taken some tough decisions in relation to public sector pay in order to keep inflation down.

Asked if there had been any concerted action with European partners, or was any being planned, the PMS replied that questions of that nature should be directed to the Treasury or the Bank of England.

Asked if the instability was still a cause for ongoing major concern, the PMS replied that we were seeing volatility in financial markets, but this was a global phenomenon and something that originated in the US. The fundamentals of the British economy remained sound, as the Prime Minister and Chancellor had made clear on numerous occasions, Britain remained well placed to withstand this uncertainty in the global economy. But of course we had to remain vigilant, and that was why the Government would take whatever action was necessary to maintain stability.

Asked on Northern Rock if the Chancellor informed Cabinet of anything beyond his statement to the Stock Market, the PMS replied that it was just an update of where we were.

Asked if the Prime Minister shared the view of the City that we should be urging cuts in interest rates, given that he had said previously that he expected them to be cut, the PMS replied that the Prime Minister had never made any forecast in relation to interest rates, or had ever commented on what the independent Bank of England should do. The Prime Minister thought that these were clearly matters for the Bank of England.

Asked if the Chancellor and Prime Minister had not gone as far to say that Britain was not going into recession, the PMS replied that what they were saying was that Britain was well placed to withstand global economic turbulence of this kind. We had seen events such as this in the past decade – the Asian crisis, the Russian crisis, the bursting of the dot.com bubble, and Britain unique among the major economies, continued to experience growth through that period.

Asked if it was the Prime Minister’s view that the turmoil was not essentially based in the UK economy, the PMS replied that the Prime Minister’s view, and the Chancellor’s, was that this was a phenomenon that originated in the United States. In Britain the fundamentals of our economy remained sound.

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» Tuesday, January 22, 2008

Economy

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