Brown Expects Support for a Global Crisis Fund

Here we see Gordon Brown talking once again about ‘coordinated responses’ to the ongoing financial crisis.

jg – November 3, 2008
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NOVEMBER 3, 2008

Brown Expects Support for a Global Crisis Fund

By LAURENCE NORMAN
Wall St. Journal

U.K. Prime Minister Gordon Brown said he believes there is support for a global fund to help stem the spread of the financial crisis.

British Prime Minister Gordon Brown with Saudi Foreign Minister Prince Saud Al Faisal at Riyadh Airport before boarding his plane bound for Qatar Sunday.

Speaking to the British Broadcasting Corp. from Riyadh, Saudi Arabia, Sunday, Mr. Brown said he has found support in the region for his proposal. "The Saudis will, I think, contribute like other countries, so that we can have a bigger fund world-wide to avoid the contagion, to avoid this spreading to different parts of the world," he said.

Mr. Brown last week said the roughly $250 billion in funds available to the International Monetary Fund to help stem the crisis isn't enough. He called on oil-rich nations and other countries with large foreign-exchange reserves to boost the resources.

Mr. Brown said he hopes to win support for an expanded fund in time for the Nov. 15 summit of world leaders in Washington. "I see the world moving closer together to work to solve these problems, and the reason I'm here is to make sure that all countries in the world, those with big resources like the Gulf states, those with big surpluses like China are working with Europe and America to find a solution to these problems, which are global," he said.

He said the world economy will get through the downturn much faster if there is "common action and coordinated responses" to the crisis.

He suggested further monetary-policy easing in the U.K. and elsewhere is appropriate. "Now that inflation is brought under control, we are going to see -- as we have seen -- two cuts in interest rates, and I believe that the trend around the world...is to respond to the fall in oil price and the falling food prices that we're seeing at the moment," he said.

Mr. Brown said the Nov. 15 summit would see further "coordinated" policy response to the financial crisis.

The Bank of England cut its benchmark interest rate by one-half percentage point on Oct. 8, part of a coordinated cut by several central banks. The Monetary Policy Committee meets again Nov. 5-6. The Bank of England is expected to make another 0.5 percentage-point cut, to 4%, when it announces the results of its monthly rate-setting meeting Thursday.

Mr. Brown, who met with Saudi King Abdullah on Saturday, reiterated his call for low and stable oil prices.

"There's a determination that we have a more stable energy market, not this volatility, not this really bad time when so many people saw the petrol prices go up so quickly," he said. "I want to see more stability as well as lower prices."

He also called on U.K. companies to respond more quickly to the sharp fall in oil prices by cutting prices. "I hope we'll see the companies that haven't yet followed the faster move down doing so in the next few days," he said.

Mr. Brown also commented on reports of a possible second bidder for U.K. bank HBOS PLC, which is set to be merged with Lloyds TSB Group PLC.

He said the government would consider any new offer. However, he noted that had the government not intervened to encourage a merger with Lloyds, the company "would have fallen altogether."

"Of course we'll look at every offer, and of course that's part of the process of shareholders sorting out what the future is," he said, "but let's remember the problems that HBOS had and why we had to intervene with so much money in the first place."

Write to Laurence Norman at laurence.norman@dowjones.com