Downing Street Says » Economy/G20

Put that James Naughtie from the BBC had done a piece in the Washington Post saying that the Prime Minister was flying around the world because he was in a desperate situation and wanted to be seen meeting serious people, the PMS said the Prime Minister had clearly set out why he was on this series of visits and why they were important. Yesterday he was in New York for a meeting with Ban Ki Moon, who would play an important role in the G20 meeting next week, as would President Lula. Emerging markets were important to the G20 process, especially on issues such as trade finance that are essential to unblock some of the difficulties that businesses had been encountering in getting the necessary finance to trade freely. In Chile the Prime Minister would meet other G20 leaders as part of the process of building an agreement towards the meeting next week.

Asked if the fall in retail sales figures reflected badly on the stimulus, the PMS said no; it reflected that we were facing difficult economic times. The point of the measures that we had been taking, both fiscal and monetary, was to stimulate the economy in a whole range of areas, for example by increasing the lending available to businesses and by reducing costs for families and businesses.

Put that the whole point of the VAT cut was to get people spending money, the PMS said that the point of the VAT cut was to put 12.4 billion into the economy over the course of 13 months.

Asked about the gilt auction, the PMS said that he had set out the Government s view on the gilt auction yesterday; we believed that the underlying market for gilts remained strong, evidenced by the fact that yields remained low.

Asked if monetary policy would bear the brunt of the UK stimulus, the PMS said that the Prime Minister made clear yesterday that we would do everything we could to ensure that the economy was able to recover as quickly as possible from the global economic downturn. We had taken action to stimulate the economy through fiscal measures, which were announced in the Pre Budget Report, and these were programmes that would continue through this year. We worked with the Bank of England (BoE) on monetary policy measures as well. The Prime Minister said in New York yesterday that we needed to look at a whole range of measures, not just one in isolation.

Put that it was now the case that the Prime Minister would have to accept that any global agreement on an international fiscal boost was off the G20 agenda, the PMS said that the premise of the question did not reflect the position that the G20 had set out. G20 Finance Ministers at their meeting last week noted that fiscal expansion was providing vital support for growth and jobs. Acting together strengthened the impact and the exceptional policy actions announced so far must be implimented without delay. It was for each government to decide how it took national action to stimulate its economy, according to its own circumstances; that could require both fiscal and monetary measures, but for those measues to be more effective we needed to coordinate action across the global financial system. Hence the reason for the meeting of G20 leaders.

Put that we needed time to find out the effectiveness of recent fiscal and monetary action, the PMS said the Chancellor had been clear that these measures were a programme over the course of a year and we needed to look at those measures and their consequences in the budget process.

Put that the Prime Minister had caved in over a second fiscal stimulus in the Budget due to opposition from the Governor of the BoE and the Chancellor, the PMS said that he did not recognise stories about splits. The Prime Minister had been making our position clear in terms of action across the board, including fiscal and monetary measures, and other measures we had been taking, which were all necessary to get the British economy through a challenging time and to ensure that businesses, families and British workers had real help now.

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» Thursday, March 26, 2009

Economy/G20

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