Downing Street Says

The Prime Minister s Spokesman (PMS) began by telling the assembled press that we welcomed the positive response, first of all from Germany, to the proposal to increase resources to the IMF to enable them to prevent the spread of financial crises to middle-income countries.

We also welcomed the positive response from China earlier today to this proposal and the indication that they had given that they would be prepared to consider contributing to any such fund.

Asked if there was any obvious instrument to force the banks to start lending, the PMS said that clearly this was something that we continued to keep under review and as and when we had anything further to say on this matter, we would. The Prime Minister and the Chancellor had made it clear that we would do whatever it took to help British businesses and families get through this difficult period. We had already taken radical and innovative action and we stood ready to do whatever was necessary.

Asked if there were any examples available, the PMS repeated that as and when we were in a position to say anything further we would be able to do that. An example of how we were using innovative methods to help small businesses was the announcement today from the European Investment Bank, which followed on from the meeting that the Prime Minister had had with Chancellor Merkel and President Sarkozy in Paris a few weeks ago. We continued to be in discussion with the banks and we were in close contact with representatives of the small business sector.

Asked whether the Government had any indication that the banks were willing to do this, the PMS replied that we wanted to have a constructive relationship with the banks on this matter. They themselves had entered into a commitment at the time of the re-capitalisation programme.

Asked if the commitments were legally binding and was there a piece of paper that was signed, the PMS said there was a piece of paper that the banks agreed to at the time of the re-capitalisation programme. Asked if the Government would consider moving chairmen or board members, the PMS said he did not want to get into the hypotheticals or anything of that nature.

Asked if there was any way the Government could block bonuses for bankers, the PMS replied that as part of the discussions and agreement on the re-capitalisation programme, the banks that were receiving support from the Government had already themselves made statements and commitments in relation to the payments of bonuses.

Put that that did not apply to Lloyds or Northern Rock because they had said that they would be paying bonuses, the PMS said that there were commitments that were entered into by specific institutions at the time of the re-capitalisation programme. Asked if the banks recognised that there was a problem, the PMS said that he was not a spokesman for the banks.

Asked if the Prime Minister was concerned at all that the inter-bank lending rate was not moving, the PMS said that clearly we had seen some movement in the inter-bank lending market, but we did say at the time that it would take time for our measures to have the full effect. We continued to monitor the situation very closely and stood ready to do whatever was necessary to support the economy at this time.

Asked if the Government s patience was running out with the banks, the PMS said he thought that fell into the category of a leading question. Asked if the Prime Minister was worried that the banks did not recognise that there was a problem, the PMS said that what the Prime Minister was worried about was ensuring that the Government did everything possible and necessary in order to see lending to small businesses from the banks and to make sure the banks delivered on the commitments that they themselves had entered into.

Asked if there was any sign that there was more lending taking place, the PMS said he was not really the person to ask and it was best to speak to the Treasury, but it was still early days.

Asked if there was any suggestion that China might be given greater voting rights following this morning s announcement, the PMS said that there would no doubt be a discussion about all of these issues as part of the wider discussion about the reform of the international and financial institutions in the weeks and months ahead.

Put that Chancellor Merkel had talked about a year-long process following the meeting in Washington in November, the PMS replied that the Americans had made clear that they would anticipate this meeting being the first of a series of meetings. At this point we were not in a position to be more specific about what those subsequent meetings might be, what format they might take or where they might take place.

Put repeatedly that the Prime Minister had said in the press conference that there might be further announcements in the next few days, the PMS said that as and when we had further announcements to make, we would make them.

Put that Vince Cable had said that there should be a code of conduct with the banks over small businesses similar to the one that existed for repossessions and mortgages, the PMS said that it was probably best to speak to the Treasury on the matter.

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» Thursday, October 30, 2008

Economy

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