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Brown reassures the City: Success is still a priority
Joe Murphy and Martin Bentham13.10.08
THE Prime Minister today moved to reassure the City of London that its success is still a priority for the Government.
He promised a Square Mile audience that criticism of bonuses and banking practices did not mean the financial sector had fallen in importance. “I don't need to tell anyone here about the centrality of the banking system to everything we do as a nation,” he said.
Mr Brown also said the near-nationalisation of three banks would not be allowed to undermine London's edge. “We will do nothing to damage London's international competitiveness. Our aim is to boost London as a financial centre and I'm determined to do everything to sustain London's place as one of the world's leading financial centres.”
He also urged world leaders to copy their forebears who rewrote the global rulebook after the Second World War at the 1944 Bretton Woods conference, which created the International Monetary Fund. Calling for a special summit to devise modern rules, he said: “This cannot be a short-term rescue to paper over the cracks. Only a surgical approach that gets to the root of the problem will now work.”
Mr Brown said today's historic announcements were difficult but necessary. “It is because we — the Government and the City working together — are prepared to take this difficult decision now that I believe the City of London as a financial centre will be stronger for the future.”.
Leaders of the 15 Eurozone countries yesterday agreed a rescue package for major banks, agreeing to guarantee loans between them until the end of next year and to allow individual states to boost the capital of struggling institutions by buying preference shares.
Bank of England interest rate setter Andrew Sentance said Britain was already in recession and warned of mass job cuts in the coming months.
“It now seems more likely than not that we will see a fall in gross domestic product for the third and fourth quarters of this year, satisfying the technical criteria which many economists use to define a recession,” he said.
Dr Sentance said figures published tomorrow were likely to show inflation heading towards five per cent. But he forecast it to drop back towards the two per cent target, paving the way for further falls in interest rates.
The respected Centre for Economics and Business Research consultancy said that with Britain facing its worst financial crisis for more than 70 years, 28,000 City workers will lose their jobs this year and a further 34,000 next year.
A study by Ernst and Young shows British companies issued 111 profit warnings in the third quarter of this year — the highest total since 2001. Andrew Wollaston, from the accountants, said: “UK plc is about to enter the perfect storm due to the confluence of the financial credit crunch and economic downturn. If not already, we are likely to be in recession by Christmas.”
Further problems are expected to be highlighted this week with the Office for National Statistics publishing jobless figures on Wednesday and the British Retail Consortium releasing high street sales statistics tomorrow.
Reader views (12)
If the 'brotherhood' of banking institutions didn't trust that 'no time for a novice' [lawyer] Darling, and don't even trust each other after this financial catastrophe, then why-oh-why should they trust a shifty 'Bottler'?
Especially after Brown had no choice last week but to ride everything on black, and this 'one off big win' is only enough just to keep him in the game until the next play.
All the 'expert' financial pundits, recently wheeled out by the media, mostly seem to agree that this mega-mess was seen coming and could, and should, have been addressed 18 months ago.
Where was Brown then?
Well he'd abandoned his Treasury desk, together with his many 'financial advisors', in order to prise out Blair
in a vain attempt to pursue life as Our Great Leader'.
Last week, it just blew up in his face.
There's been no one at the wheel for almost 2 years.
- Dave, cumbria
This Mr. Bean Brown does not re-assure me.
- Jacqueline, Hampstead, London
This country is at very low ebb indeed. New Labour has done immense damage with its short-sighted laxity on the economy and with its lack of immigration controls.How Brown can boast about sorting out the bank liquidity crisis at this time beggars belief. He may well find that recalling Mandelson is a step too far!.
- Bill Caplin, Camden
Let's get this straight. Gordon Brown hung his backside over a volcano for ten years and is now telling us he is the man to put a plug in it...!
- Ken Charman, Wokingham UK
Can we believe in the credibility of Gordon Brown, who in 1997 ridiculed the Japanese banks for getting into difficulties over bad mortgages, and then removed he Bank of England’s control over UK banks loans. The only change to Boom-and-Bust under Gordon is that the Boom is greater for those with loads of money and thee bust is paid for by the workers.
- Dave Bristol, Bristol England
I think it is clear that Crash and his team created this mess in the first place (aggressive taxation on the working class but subsidies and extreme freedom for the financial sector plus an enormous ineptitude at economic country management) and now he blames everyone else. Who believes Nu Labor will get away with this one, I mean with Teflon gone and nobody in the current government actually elected...
- Jacqueline, Hampstead, London
Gordon Brown should remember Churchill - who was popular in 1940 when threat united us.
But they slung out Churchill in July 1945 when the threat was over - and we won! Neither was Churchill held accountable for causing the war - unlike Brown who caused quite a lot of this threat and is still causing it.
- Anglo, Sussex UK
The comments of James, Phil Jones and Georgie echo the uneducated views of Republicans in the US before their "bail-out" was passed. The UK government has acted just in time to stop the slide. Cameron and Osborne are minnows compared to Brown on economic matters and of the same breed as the City fat cats who have failed so dramatically.
- Mal, Slough
Let's figure this one out . . . Taxpayers have to bail out the banks that were systematically "ripping-off" customers through unnecessary, greedy "over-charging" over the last 10 years? So the Taxpayers many of whom were themselves being "ripped-off" are forced to pay for the banks stupidity, negligence and ineptitude?
So when exactly will the taxpayer/customers receive the "automatic repayment" of ALL of the "overcharges made by the financial institutions"? When exactly is the Prime Minister going to reassure the average punter and demand that ALL rebates are "paid automatically within 30 Days"?
- Fraser, Telford Park
Nu Labor Chutzpah!
The nerve of these idiots is quite stunning. The scariest thing to my mind is that the UK could we re-elect them again!
- James, New Malden, Surrey
The person that benefitted by letting house prices and unsecured credit run out of control for 11 years is now attempting to benefit from handling its effects.
- Phil Jones, London UK
Market would be much stronger had you gone Crash Brown! The sooner the better so professionals can take over. With Crash it's always "created by the Americans" ?! If Brown had not wasted all our money and still does, we would be able to withstand this crisis. For the sake of the country and its future generations please Crash, go away!!
- Georgie, Islington, London
