Downing Street Says

Asked to describe the mood of the Cabinet this morning as they discussed the world economic problems, the Prime Minister’s Spokesman (PMS) told the assembled press that the mood of the Cabinet was summed up by the Prime Minister and the Chancellor, who said that these were global issues that all countries were facing at the moment. In Britain, the fundamentals of the economy were sound and inflation was low; there had been 61 consecutive quarters of growth; employment was at a record high and the Government was determined to do everything in its power to maintain stability.

This was why the Government intervened in relation to Northern Rock, to stop the problems there spreading elsewhere in the financial sector and that was why for example the Government had taken tough decisions on public sector pay.

Asked if he thought the interest rate cut in the United States would help stabilise the global economic problems, the PMS replied that the Government would not comment on interest rates in Britain, let alone in any other country.

Put that the Bank of England would not be moving their monthly policy meeting forward in light of the present circumstances, the PMS said that it was a matter for the Bank of England.

Asked how the Prime Minister would respond to criticism from the opposition suggesting that Britain’s fiscal position was not strong enough to ride out the current economic downturn, the PMS replied that the Prime Minister would not accept that. Public debt as a proportion of GDP in Britain was one of the lowest in the G7.

Put that in terms of the budget deficit, the UK was not doing very well when compared to the rest of the G7, the PMS said that what mattered in terms of the fundamental position was the debt stock and the debt stock as a proportion of GDP was low relative to most other G7 economies. This meant that in order to meet our public investment demands, we were able to run modest deficits in the medium term and that’s what the Government was doing.

Put that the UK was not in a position to give fiscal stimulus, the PMS reiterated that Net debt, as a proportion of GDP compared with most other G7 economies was quite low.

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» Tuesday, January 22, 2008

Economy

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