Downing Street Says

Asked for a reaction to the US proposal of putting private assets into a state-sponsored fund, the Prime Minister s Spokesman (PMS) told the assembled press that these were matters for the US authorities.

The Prime Minister was setting out this morning the action that we had already taken in Britain to deal with the situation in financial markets. This included the announcement yesterday from the Financial Services Authority (FSA) on short-selling, the action taken by the Government to allow the LloydsTSB/HBOS merger to move forward and the action that had been taken by the Bank of England, both internationally to support dollar money markets and domestically in the UK to extend the special liquidity scheme. Of course we had already taken action in relation to Northern Rock.

As the Prime Minister was saying this morning, we would continue to discuss these issues with our international partners over the days and weeks ahead. The Chancellor spoke yesterday to Mr Paulson, the US Treasury Secretary and the Prime Minister also spoke again to President Sarkozy yesterday. So we would continue to discuss all of these issues with our international partners but we had already taken decisive action in the UK.

Asked about coordinated action and whether that referred to what the PMS had already listed or whether there was something specific on the table, the PMS replied that each country had obviously been dealing with this in their own particular ways, dependent on the situation that they faced in their own markets. This was of course a global phenomenon, so we would continue to discuss all of the relevant issues with our international partners in the days and weeks ahead.

Asked repeatedly about the fund proposed by the US and whether the Prime Minister thought it was sensible or something that Britain should be doing, the PMS reiterated that each country was responding in its own particular way depending on its own particular circumstances. In Britain, we had already taken action to deal with for example, institutions like Northern Rock, we allowed the merger of LloydsTSB and HBOS to move forward and the Bank of England had already taken significant action to support the banking system in the money markets. In addition, the FSA had taken action on short-selling.

The PMS added that he would not get into a discussion or comment on hypothetical scenarios or specifics, but we were discussing with our international partners the different action that each country was facing. Put that the Treasury was sure to have a similar contingency plan in place, the PMS said he did not think it was very sensible for him to start talking about the Treasury s contingency plans.

Asked to elaborate on the talks the Prime Minister was having with President Sarkozy, the PMS replied that we had been talking with our European partners for some time about a whole range of issues in relation to for example, enhancing transparency; better cooperation between regulators; putting in place better early warning systems; issues relating to credit-rating agencies. People would remember that we hosted a meeting in London earlier this year, with President Sarkozy, Chancellor Merkel, Prime Minister Prodi of Italy as he was at the time and the President of the European Commission.

So we had been discussing these issues with our European partners and we continued to do that. There would be a European Council meeting in a few weeks time that France would chair and obviously they were the Presidency so the agenda was a matter for them. It was inevitable though that in the current circumstances, there would be some discussion about economic issues.

Asked if the PMS could give any insight into the talks between the Prime Minister and the First Minister of Scotland and would they be talking again, the PMS said that the Prime Minister and the First Minister did speak yesterday morning about the LloydsTSB/HBOS merger. It was an opportunity for the Prime Minister to bring the First Minister up to date on what had happened. The UK Government continued to remain in close contact with the Scottish Executive on a whole range of issues, as people would expect.

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» Friday, September 19, 2008

Finance

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