Downing Street Says

Asked whether the Prime Minister had been saying in his statement that borrowing was a good thing, the Prime Minister s Spokesman (PMS) told the assembled press that the Prime Minister s point was that we were starting from a position where we had much lower levels of public debt as a proportion of GDP, according, for example, to figures published most recently by the IMF.

The whole point was that because we had low levels of public sector debt, we were able to increase borrowing at what was clearly a quite difficult time for the economy in order to support the economy and that was the right thing to do.

Put that the figures that came out today reflected an increase in borrowing before a difficult time for the economy, the PMS replied that growth in the economy had been slowing down. That was an accepted fact. What had happened in global markets had also hit the financial sector particularly hard, which was obviously an important sector for the UK and UK public finances.

Asked whether it was the Government s view that it was not a bad day for the economy when the figures seemed to suggest otherwise, the PMS said people clearly needed to look at the figures as a proportion of GDP, not at the cash numbers, in order for them to make sense. The point was, as the Prime Minister had said, was that starting from low levels of public debt as a proportion of national income, we were able to increase borrowing at this time and that was the right thing to do.

Asked which of the figures was an acceptable one and when should people start worrying about them, the PMS said that if that was a question about what the future course of fiscal policy should be, then it would be best for people to wait for the Pre-Budget Report (PBR) and the Budget.

Asked at what percentage would low borrowing in relation to GDP become medium or high borrowing, the PMS said that we could have a semantic discussion if people liked, but the Treasury would set out its revised forecasts and its overall approach to fiscal policy in the PBR and the Budget in the normal way.

Asked whether the Government was worried that a large part of the borrowing was structural, the PMS said issues relating to the structure and the cyclical component would be part of the analysis that the Treasury would set out in the PBR and the Budget.

Asked when the Pre-Budget Report would be, the PMS replied that when the Treasury were in a position to make an announcement on the PBR he was sure they would do so.

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» Monday, October 20, 2008

Economy

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