Briefing from the Prime Minister’s Spokesman on: Gulf trip, interest rates, US elections and oil prices
Gulf Trip
The Prime Minister’s Spokesman (PMS) began by giving details of the Prime Minister’s visit to the Gulf so far. The Prime Minister was in Qatar this morning where he visited a gas field, and the Shell Gas to Liquids project. Qatar could potentially provide up to 20% of British gas in the years ahead. He then travelled to a military airbase also in Qatar, where he met British Forces from the Royal Air Force who were involved in providing logistical and support operations in Iraq and Afghanistan. The Prime Minister then travelled to Abu Dhabi where he had just had a meeting with the President. Later today he would be visiting the Higher College of Technology where he would meet students and have a presentation on Masdar which was a highly rated low carbon city project.
Asked what success the Prime Minister had had with contributions towards the IMF fund, the PMS replied that this was one of the many issues that the Prime Minister was discussing whilst he was here. As he said yesterday in his interview, the Prime Minister had a constructive discussion with the Saudis, and the comments yesterday from the Qatar Prime Minister at their joint press conference indicated again a constructive response from Qatar. We were seeing real engagement from the countries we had been speaking to. These were important countries in terms of how the global community responded to the global financial crisis.
Asked how big the Prime Minister wanted this new fund to be, and did he have a figure in mind, the PMS replied that as we had been saying in recent days, the IMF already had $250 billion available, but we believed that this was insufficient and that the IMF would require several hundred billion dollars extra.
Interest Rates
Asked about interest rates being passed on to customers, the PMS replied that when official rates were cut consumers would expect to see the benefit, but at the moment we were seeing difficulties in the inter-bank market and that was what we were trying to address. By addressing the root cause of the problem, the inter-bank market, we would be able to get money flowing around the system in a way that would ultimately benefit households and consumers. The Prime Minister was very clear that we were taking action in order to ensure that mortgage holders and small businesses in particular did benefit.
Asked if the Prime Minister was expecting coordinated interest rate cuts to come out of the November 15th meeting, the PMS replied that the Prime Minister’s view on this, as he said yesterday in his interview, was that decisions on interest rates were decisions taken by independent central banks.
Put that the taxpayer now had a direct interest in some of the banks’ lending decisions and therefore it was not strictly a commercial decision anymore, the PMS replied that there were specific commitments that had been entered into by the banks who were beneficiaries of the Government’s recapitalisation programme, and those were the commitments that the banks entered into at the time of the recapitalisation programme, and we expected those commitments to be met. We were trying to improve the workings of the money market so that we could get more liquidity into the market and get the wholesale money market working better. That ultimately should benefit consumers.
Asked what the Prime Minister thought should happen to banks if they refused to honour the commitments they had made, the PMS replied that we were not going to get in hypotheticals. We were in regular contact and dialogue with the banks as people would expect. Peter Mandelson and Alistair Darling met representatives from the banks and small businesses recently, and he was sure there would be further discussions going ahead. But to reiterate these were commitments that the banks themselves had entered into.
Asked if there was a flaw in the original contract that there was only a loose promise that banks would lend to small and medium sized enterprises, the PMS replied that the answer to that was no.
US Elections
Asked if the words in the Prime Minister’s speech on America indicated that he thought there would be a vacuum in leadership after the Presidential election, and would the President-elect attend the meeting on the 15th November, the PMS replied that the second point was really a matter for the Americans to decide who would represent them and who would attend. In terms of what the Prime Minister said today, he was saying that we had seen American leadership in recent months in relation to dealing with the financial crisis. It was the Prime Minister’s view that we were facing a global problem that required a global solution, and global solutions in relation to the economy or any other area could only be effective and lasting if they had the full engagement and leadership of the Untied States. That was why the Prime Minister said that we expected the leadership would continue, and that it must continue.
Asked if the Prime Minister was concerned that there would be a vacuum, the PMS replied that the Prime Minister had every confidence that the transition would be managed in a way that would ensure that that was not the case. It was important, as the Prime Minister said, that we did have American leadership in the weeks and months ahead. That must continue, and the Prime Minister was confident that it would continue.
Oil Prices
Asked about the stability of oil prices, and if the Prime Minister would be making any representations to the oil producers to get the price down, the PMS replied that what the Prime Minister had been saying to the oil producing nations whilst he had been in the region, was that it was in nobody’s interest to have the volatility in oil prices that we had seen in recent years, particularly when we had seen oil prices rise to $150 a barrel. That was why the Prime Minister was very supportive of the meeting in Jeddah in the summer that was about bringing together oil producers and oil consuming nations to try and find ways of making the oil market work better, introducing more transparency into the market and to have a better dialogue between producer and consumer nations. That was why we would be hosting a follow-up conference in London on this in December.
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