» Tuesday, January 13, 2009


Asked for a readout from the Prime Minister s meeting with Ben Bernanke, the Prime Minister s Spokesman (PMS) replied that it was a very good meeting and they had met several times before. They mostly discussed the global economic situation and the preparations for the G20 meeting, and obviously the Prime Minister would very much endorse the sentiment of Mr Bernanke s speech, in particular his emphasis on the need for enhanced global cooperation in order to deal with the global financial difficulties that we all faced at the moment.

Asked about tomorrow s announcement on loan guarantee schemes, the PMS replied that as we said this morning, we had always made clear that we would consider all options and do whatever it takes to help business and households to get through this global financial recession. We had been considering a range of options looking at the next stage in relation to what we could do to help businesses and households get access to the finance they needed, and we would be looking at this in a comprehensive way and bring forward proposals over the next few weeks. Where we would be bringing forward proposals over the next day or two would be in relation to what more we could do to help in particular those small and medium sized enterprises that were viable, but had difficulty accessing working capital. As Lord Mandelson had been saying, this was not about giving blanket guarantees. Our proposals would be targeted, thought through and funded, without imposing further unreasonable costs on businesses. There were a range of issues, and guaranteed loans was one of them, working capital was an issue related to that, and there were issues in relation to credit insurance along with issues in relation to new forms of equity for firms. So this was a complex matter, the Department for Business and the Treasury had been looking at this in detail for some time, discussing it with the banks, and we expected to bring forward proposals very shortly.

Asked about working capital, the PMS replied that there was a range of issues. Small businesses were finding difficulty looking at credit insurance of working capital with longer-term loans. But there was a specific issue in relation to the need for short term funding for viable businesses who we would not want to see go under at this time.

Asked about the 20billion figure that was being reported, the PMS replied that his guidance would be to be careful with this as there was an element of apples and pears in some of the way that this had been reported in the last 24 hours.

Asked to explain apples and pears , the PMS replied that he could not go into the specifics of what would be announced tomorrow, but some of the language that had been used had been a bit loose.

Asked about the Prime Minister s comments on World at One on analysis of credit guarantee schemes, the PMS replied that it was best to wait and see. We wanted very much to target our support on the good viable companies those companies that were in a strong position to repay their loans, but because of the global financial crisis and closure of many markets for finance and credit across the world, were finding it difficult to access short term finance.

Asked if BERR had the capacity to make judgements on individual companies, the PMS replied that he was not going to get into the specifics of the announcement before it had been made, but the way that this would tend to work was that the Government would normally set out criteria for banks, but obviously it would be for banks to make decisions about individual companies, as these were the institutions that had the knowledge and were in a position to make those decisions on individual companies.

Asked if a bank would be required to follow criteria set by Government, the PMS replied that he could not get into a discussion about the specifics of an announcement that had not happened.

Asked why a bank would not lend to a company if it was viable, the PMS replied that this was exactly the issue that we were facing at the moment. We had seen the closure of many financial markets and credit markets across the world. That was the nature of the global credit crunch. Many banks themselves were facing liquidity problems, and that in turn was creating liquidity problems for many small and medium sized enterprises. That was why we wanted to take action in order to unblock some of those markets.

Asked why it had taken so long to come up with these plans, the PMS replied that he did not accept that. We took action in October in order to prevent the banking system from collapsing, there was a significant expansion of the Small Firms Loan Guarantee scheme in the Pre-Budget report, and we had been working intensively with the banks to move towards the next steps. We would be announcing further measures in the weeks ahead, but specifically in relation to those small and medium sized viable enterprises facing difficulty, we hoped to be making an announcement very shortly.

original source.

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

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