Downing Street Says

The Prime Minister s Spokesman (PMS) explained that the Prime Minister would be travelling to Brussels tomorrow for the informal meeting of the European Council and that he believed this was a decisive moment for the world economy. We were facing a global crisis that required a global solution, which was why the Prime Minister would continue to work with other world leaders on action to give British families and British businesses the support and security they needed to protect their mortgages, their jobs and their standards of living.

In recent weeks the Prime Minister had been discussing with world leaders (including in Gulf at the weekend and in Brussels tomorrow) the need to take action on five fronts. The first front was cooperative action on monetary and fiscal policy; second was reform of the international financial system; third was immediate action to stop the spread of the financial crisis, including more resources for the International Monetary Fund; fourth was the recapitalisation and resumption of lending by banks; fifth was progress on a world trade deal.

In regards to cooperative action on monetary and fiscal policy we had today seen decisive action on interest rates from the Bank of England (BoE) and European Central Banks. As central banks had taken action to support economic growth at this time, it was right that governments did likewise. We had cut taxes this year in Britain to stimulate growth and made clear that this was not the right time for short term cuts in investment and public spending. European Finance Ministers concluded on 7th October that the application of the stability packs should also reflect the current exceptional circumstances. Yesterday the German Government announced a fiscal stimulus plan and an increase in their borrowing projections. President Elect Obama was also committed to using fiscal policy to support the US economy. With action taken on monetary policy it was becoming increasingly clear that there was now an emerging consensus across the developed world of the need to use fiscal policy in tandem with monetary policy to support economic growth. The Prime Minister would be making this point tomorrow in Brussels where he would also raise the issue of how best to cooperate on monetary and fiscal policies in the future. The Prime Minister would also be setting out a number of things including; the reform of the international financial system and the action that needed to be taken; the five principals referred to earlier; action on crisis prevention, trade deal and the recapitalisation of a number of our banks.

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» Thursday, November 6, 2008

Brussels

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