» Tuesday, November 25, 2008


Asked about the Governor of the Bank of England s comments that the Government needed to intervene directly with banks if they refused to step up lending, the PMS replied that obviously this was something that we kept under constant review, and we remained in close contact with the Bank of England and the Financial Services Authority on these matters. We wanted to work constructively with the banks, and we wanted them to fulfil the commitments that they themselves had entered into, but as we had said consistently, it would be foolish to rule out any options at a time like this when there was so much change. These were extraordinary times, but we did want to work in a constructive way with the banks going forward.

Asked if there was any indication that we were responding, the PMS replied that we had seen the banks pass on in full the reduction in interest rates, and we had seen the announcement at the weekend from RBS to freeze overdraft charges for small businesses, which was something that we welcomed, but clearly there was more to do.

Asked about the bank lending rate, the PMS replied that he had not examined all the latest numbers, but we had seen a reduction. We were beginning to see some of the benefits of the recapitalisation programme starting to feed through, but it did take time, and equally it was important that the banks fulfilled the commitments that they entered into.

Asked if the Prime Minister agreed that further recapitalisation might be necessary, the PMS replied that we had set out our plans, and that was where things stood.

Put that the Governor was asked very specifically about the Government taking control of banks, and that he said it would be foolish to rule anything out, the PMS replied that as he had said last week on behalf of the Prime Minister, it would be foolish to rule anything out.

Asked about a Treasury statement on lending this afternoon, the PMS replied that there would be a statement from the Treasury, the Bank of England, and the Financial Services Authority updating where we were on a number of these issues, but it was best to speak to the Treasury.

Asked if the Government was concerned that the OECD did not share their optimistic forecast for growth, the PMS replied that the OECD did share our forecast for growth next year. They were forecasting a 1.1% decline in output, we were forecasting -0.75% to 1.25%. They themselves acknowledged that their forecast did not take into account the measures that we announced in the budget yesterday.

Put that their forecast for 2010 was slightly less, the PMS replied that different organisations had different forecasts. Our forecast was very similar to that of the Bank of England, and as we had said, the OECD forecast did not take into account the significant fiscal stimulus that we announced yesterday.

Put that there was concern among small businesses that the cost of implementing the 2.5% cut in VAT would exceed any savings, the PMS replied that he had not seen anybody specifically suggest that. Baroness Vadera, Minister for Small Businesses was on the radio at lunchtime talking about this we had had a very close dialogue with the business community and the retailers on this matter, we wanted to continue to work with them, but we did want to ensure that customers did see the benefits of the reduced rate of VAT as soon as possible and as soon as practicable. One retailer today had already announced that it would be reducing its prices with immediate effect.

Put that there was concern among small businesses over the cost of implementing this, the PMS replied that he had not seen that specific suggestion. We announced yesterday a significant package of support for the small business community that was welcomed by the small business groups. The VAT measure was a significant measure, and we did want to see the benefits of that passed on to customers as soon as possible, and it would provide significant benefit to millions of families and businesses across the country.

Asked about an agreement that businesses had entered into recently with VAT authorities on a flat rate scheme, the PMS replied that it was best to speak to the Treasury on that.

Asked if the Prime Minister thought that the PBR deserved a special debate in the House of Commons, the PMS replied that the Prime Minister s view was that the Government was very happy to debate the Pre-Budget Report in the House of Commons, or anywhere else. Clearly this was a matter for the business managers, but there would be numerous opportunities during the course of the next week in the Queen s Speech debate, to debate fully the Government s economic policies.

original source.

Briefing took place at 16:45 | Search for related news

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