Tags: Bank | England | Governor | Takes | Long | View

Bank of England Governor Takes Long View

Sunday, 23 September 2001 12:00 AM

He scorned reports that British consumer spending had fallen by 30 percent in the first week saying that it was more likely that this was true of the first two days because people were watching the events on television.

The Bank of England had already been acting to sustain domestic demand and the British economy had been "somewhere along the bottom". The markets and spending were affected by an important sentiment "shock," he said.

There had been a continued sharp fall in equities around the world, which reflected nervousness about military response. Markets were still waiting to see "what is going to be the next development" But, he added, "the volatility suggests the markets are trying to find a level."

He was positive about oil prices and praised the OPEC countries for keeping prices stable. OPEC is due to meet next week.

He said it is necessary to extrapolate the immediate effects of the attacks and to take a long term view. "We have to look beyond the present and see what has changed," he said. He added that it is important to see what is underpinning the world economy saying it was "responsible action and financial as well as military".

The pound had edged down against the euro, which had recovered against the dollar, and any further easing would benefit Britain, which has been suffering from a highly valued pound.

The bank of England will be holding a staff meeting on Friday and will meet again the following Wednesday to consider interest rates. "We shall be looking at the prospects for two years ahead," he said.

EU finance ministers meeting at a special session in Liege, Belgium, Saturday along with the President of the European Central Bank, the 15 finance ministers of the EU started to assess whether the attacks would push the zone into a recession. They agreed that the economic impact of the attacks on the United States would be heavy.

EU Economic and Monetary Affairs Commissioner Pedro Solbes said at a news conference in Liege that the rate of growth in the zone would be "clearly below 2%". That marks a further scaling down in already dim euro zone growth prospects for 2001. Until now, the EU had estimated growth at around 2%.

Solbes said that further evaluations of the impact of the attacks would continue at the European Commission, the EU executive, in coming weeks.

The ministers also agreed a statement on "combating the financing of terrorism" which will be discussed in a special joint meeting of EU finance ministers and home and justice ministers in Brussels on Oct. 16. European Central Bank President Wim Duisenberg also signed up to that statement along with the EU Commission and the 15 EU finance ministers.

And, in contrast with earlier speculation that the ministers might take steps to make the Stability Pact (which limits government borrowing in the euro zone) more flexible, the ministers contented themselves with reiterating and underlining the existing terms of the Pact, squashing ideas that they might allow states in the zone to let spending rip during the current downturn.

France, in particular, has been pushing for a suspension of the pact for a year while euro zone economies try to cope with the current economic slowdown.

Ministers committed themselves to speeding up the adoption of the EU Money Laundering directive which has been languishing in the European Parliament as a result of pressure brought to bear by the legal and accountancy professions in several EU countries. Lawyers' associations fear that the directive would undermine their traditional right to confidentiality in relationships with clients. Ministers also called for the present directive to be extended to cover terrorism as well as other crimes.

The EU states want to speed the process of 'conciliation', the dialogue between the 626 strong elected assembly and member state ministers, to get the directive agreed as soon as possible.

Copyright 2001 by United Press International. All rights reserved.

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He scorned reports that British consumer spending had fallen by 30 percent in the first week saying that it was more likely that this was true of the first two days because people were watching the events on television. The Bank of England had already been acting to...
Bank,England,Governor,Takes,Long,View
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2001-00-23
Sunday, 23 September 2001 12:00 AM
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