Downing Street Says

» Wednesday, January 21, 2009

Economy

Asked whether the Government was drawing up contingency plans in case the UK defaulted on its debt, the Prime Minister’s Spokesman (PMS) told the assembled press that he did not accept the premise of the question. We were taking the action necessary to keep our public finances on a sustainable footing over the medium term.

The PMS added that if you looked at gilt yields for example, which had actually fallen this morning, British Government debt in what was a highly liquid market, traded with yields which were now slightly lower than France and lower than most other comparable countries in the Euro.

Asked whether the Prime Minister agreed with Tony McNulty when he said there was light at the end of the tunnel, the PMS said it was clearly a difficult period for the economy. The role of the Government was to ensure we did everything we could in order to get the country through this fairly. That was why we were taking the action that we were; to help people with jobs last week, why we took action on Monday to get credit flowing and why we took action in the PBR to help people with their household bills.

Asked whether the Government was concerned that the collapse in banking share prices meant that the package announced on Monday had not restored confidence, the PMS replied that the purpose of the package that we announced on Monday, which had been some weeks in the planning, was to unblock some of the constraints on lending at the moment. The objective was to get lending flowing to households and businesses.

Asked whether the Government was actively considering nationalising more banks, the PMS said that the position on the public ownership of banks was set out by the Chancellor in the House of Commons on Monday and that remained the position.

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Economy

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