Downing Street Says

Asked if the jump in inflation was discussed at Cabinet, the PMS replied that this was mentioned by Alistair Darling. The overall message was that we were seeing global increases in inflation at the moment that was affecting all countries including the UK. Although inflation had risen this morning, it remained lower that for example in the US where inflation was currently over 4%.

Asked how the Prime Minister felt about the inflation figures, the PMS replied that the Prime Minister’s view, as he was saying yesterday, was that we were facing a challenging economic period, but these were issues that were affecting all countries. We needed to ensure that we worked with our international partners globally to deal with these global economic problems, and that was what he and the Chancellor would continue to do.

Asked if the Prime Minister had any sympathy with council workers, some of the lowest paid people in the country, who had been offered a below inflation pay rise, the PMS replied that of course the Prime Minister and the Government as a whole acknowledged the very important work that many people who worked for local authorities did in delivering services to the public. But the Government did not set local authorities pay, so this was an issue between the local authorities and local authority workers. And the second more general point was that we had had to make some difficult decisions in the last year or two in relation to a very wide range of public sector workers, and it had been necessary to do that in order to keep inflation lower than it might have otherwise have been. That had enabled the Bank of England to keep interest rates lower than they might have otherwise had been, and we wanted to avoid any suggestion of a return to the sort of wage price spirals that we have seen in previous decades when faced by a global inflation shock of the kind we had seen recently.

Asked if the Prime Minister was disappointed that the local authority leaders had refused any sort of negotiations, the PMS replied that this was really a matter for the local authority leaders and the unions involved. But to reiterate, these were difficult economic times, and a wide range of public sector workers were also having to accept lower settlements than anybody would like to have seen in an ideal world.

Asked if the Chancellor’s interpretation of the economy at Cabinet this morning was that things were getting better or things were getting worse, the PMS replied that the overall message from both the Prime Minister and the Chancellor was that we were facing global economic problems that required global economic solutions. But in terms of what this meant for domestic policy in the UK, they were also decisions that affected a wide range of government departments, not just the Treasury or the Department for Business. So for example if we were to deal with high global oil prices, then we had to accelerate progress towards reducing dependency on oil, and that affected a range of government business including the work of DEFRA. Likewise facing high global food prices affected a range of government departments. So the overall message was that these were global problems, that required global solutions, but they would also impact upon a wider range of government departments than might normally be the case for economic policy.

Put that there was therefore no assessment this morning of where we were, the PMS replied that the Chancellor did not produce any new forecasts.

Asked if the Prime Minister was worried that for millions of families the inflation figures did not bear relationship to the double digit increases that people were seeing to the price of fuel, food, heating and electricity, the PMS replied that there were well established procedures for measuring inflation; these figures were put together by the independent Office of National Statistics.

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» Tuesday, July 15, 2008

Economy

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