Downing Street Says

Asked if the Prime Minister was comfortable that RBS, Lloyds and HBOS run businesses that helped people avoid tax, the Prime Minister s Spokesman (PMS) replied that detailed questions about issues relating to these specific banks should be addressed to the Treasury.

Asked for any information on the agenda for tomorrow s European Council, the PMS replied that clearly the main issue for discussion at the summit tomorrow would be the economy and the financial situation. The Eurozone plus the UK met on Sunday, we announced our detailed implementation yesterday, a number of Euro-area countries announced their detailed plans yesterday, so no doubt there would be a discussion with the other non-Euro members of the European Union about how they were taking things forward and how we could come to a common European Union position. But as the Prime Minister was saying this morning, this was not only about what he described as the first stage of stabilisation. We also needed to move discussion to the next stage, which was about how we reformed the international financial architecture to try to ensure that similar episodes did not happen again.

Asked if the Prime Minister was hoping that the EU would endorse his suggestion for a new global market structure and a new Bretton Woods conference, the PMS replied that the Prime Minister tomorrow would be talking about the five principles for reform of the financial system that he talked about in his speech yesterday, and talked about this morning in his briefing with foreign press. These were how we could enhance transparency and integrity of the system, how we could enhance responsibility among decision makers in the financial sector, how we could strengthen and have sound banking practice, and how we could improve international coordination. These were the five principles around which we were trying to seek agreement, and there would not doubt be some discussion of some of the detailed measures that might follow from those principles.

Asked what we were looking for in an outcome, the PMS replied that clearly we would first be looking to get agreement on a common European position on the existing stabilisation measures. The discussion so far has only involved the Euro-area and the UK, and there were a number of other significant countries and economies that needed to be included as part of that discussion. But secondly, the Prime Minister would be looking to have a substantive discussion about the reforms needed for the next stage, around some of the principles that need to guide our approach to the next stage, and what some of the processes might be that follow.

Asked on the Bretton Woods issue if the Prime Minister would be hoping to see some kind of process and a get together on this front this side of Christmas, the PMS replied that clearly it was important that we were able to demonstrate to the public and to markets that we were making progress on the next stage, and therefore the sooner we were able to reach agreement on substantive measures at international level the better. At the same time it was the Prime Minister s view that there would clearly need to be some preparation before a leaders meeting took place so that there could be proper substantive and agreement at such a meeting.

Asked at what sort of level these discussion would be held at, the PMS replied that in a way that was part of the discussion going forward, and we would not necessarily envisage the discussion only being in one forum. It could easily be a discussion that affected different countries in different ways and therefore it was possible that a number of different fora might want to discuss this. For completeness the PMS informed Lobby that the Prime Minister had spoken about the financial situation and the way forward to the Chinese Premier Wen Jiabao, and to President Bush this afternoon, where President Bush updated the Prime Minister on the US announcement earlier today.

Put that the Prime Minister said this morning that the coming days would be crucial, and that surely this would actually take quite a bit of time, the PMS replied that there were a number of stages. Clearly there were announcements that had been made today in the US after the Prime Minister gave his press briefing this morning, and there were issues for Europe in relation to the short term in relation to the first stage that would need to be addressed at the European Council. But we also need to have a discussion about how we move to the next stage, and that was what we would also be seeking to do at the European Council tomorrow and Thursday.

Put that the Government was paying for the bail-out through borrowing, and asked from who we would be borrowing the money from, the PMS replied that normally the Government would issue gilts into the gilts market, and whoever wanted to buy those gilts would buy them.

Asked on the Prime Minister s comments this morning if he hoped that banks that were not receiving Government support would also adopt the same kind of lending to small businesses and homeowners that he wanted to see, the PMS replied that we had made specific arrangements directly with the banks that had received funding from the Government. We had not reached similar agreements with banks that had not received capital from the Government. His understanding of what the Prime Minister was talking about this morning was a more general comment about the need to see more responsibility in the financial system, and in particular more responsible risk taking in the financial sector, and that was clearly something that affected all financial institutions, not just those in receipt of Government funding.

Asked if the Prime Minister was cheered by the fact that we now may not have to buy as much of RBS as we thought, the PMS replied that we would not be commenting on the Government s intentions in relation to purchases of bank stocks. If we did it would be through a stock exchange notice in the normal way.

Asked if the Prime Minister was pleased by the reaction he was receiving around the world for this rescue plan, the PMS replied that the Prime Minister was focusing on doing everything he could to help families and businesses in this country. That was why we took the far reaching action that we had taken in recent days, and that was why we continued to work with our international partners in order to see how we could continue to reform the financial system. Ultimately that was what this was all about helping people in this country who were concerned about their savings, or about getting a mortgage, or about small businesses trying to start their business. That was what the Prime Minister was focusing on.

Put that the Prime Minister s mood must have been better than in recent days, given the reception he was given earlier by the Foreign Press Association, the PMS replied that what was motivating him was the desire to do everything he could and ensure the Government was doing everything it could in order to help the country get through this difficult period.

3 Comments »

I have read and listened with interest about Gordon Brown’s and the EU’s committment to help SME’s.
I am a small company (of one)and cannot get any help whatsoever in ensuring my business stays afloat.
I apparantly live in a ‘affluent’ area – although I
Comment by susan port — 15 Oct 2008 on 12:13 pm | Link
I have read and listened with interest about Gordon Brown’s and the EU’s committment to help SME’s.
I am a small company (of one)and cannot get any help whatsoever in ensuring my business stays afloat.
I apparantly live in a ‘affluent’ area – although I am by no means affluent.
From what I see, if you are a big company, well known etc, you can get all the help that is available.
Do you not realise that it is little people like me that are trying to keep things ticking over – and that one day – with the right kind of help – we will become the bigs guys who then go on to help other little people.
Comment by susan port — 15 Oct 2008 on 12:16 pm | Link
Could you guys ask Flash Gordon (a) where the £500bn is coming from. Borrowing? If so, which banks? (b) what he intends to do to neutralise the threat posed by the CDS &c? Is he confident that the legal status of all these special instruments is beyond question?
Thanks
Comment by Richard Lawson — 15 Oct 2008 on 5:45 pm | Link

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» Tuesday, October 14, 2008

Economy

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