Blair will back Clinton's worldwide rescue fund
By David Wastell and Bill Jamieson
TONY Blair last night pledged support for a financial package, proposed by President Clinton, to halt the world's deepening financial crisis.
The support came as finance ministers and central bankers of the world's most powerful nations prepared to cut interest rates to prevent a slump.
Joe Lockhart, the President's spokesman, said last night that Mr Clinton, in telephone calls both to Mr Blair and Jacques Chirac, the French president, received "a positive response" to his proposals for an emergency fund to help countries hardest hit by the global crisis.
The Chancellor, Gordon Brown, and Eddie George, the Bank of England governor, both attending the summit, appear ready to back a US-led initiative. In Britain this means the Bank of England's Monetary Policy Committee, chaired by Mr George, will come under pressure to cut interest rates this Wednesday. Industrialists and many economists are calling for a cut of at least a quarter of a percentage point to 7.25 per cent.
Details of the US rescue package are expected to be released today at the end of vital meetings of the Group of Seven industrialised nations and the International Monetary Fund. But they are thought to include a fund to help economically stricken countries and specific assistance for Brazil, on the brink of financial disaster as its government attempts to refinance its heavy borrowings.
The G7 meeting comes at a time of mounting panic in financial markets. Financiers hope that the IMF will provide emergency financial relief to Brazil to prevent a worldwide slide into recession. Last week Mr Clinton warned that the world faced its most serious crisis for 50 years, and said it was on a "financial precipice".
The G7 summit, which coincides with key meetings of the IMF and the World Bank, represents the biggest gathering of economic and financial know-how since the world markets were torn apart by the collapse of the Russian economy and the near failure of Long Term Capital Management, the vast US hedge fund.
British officials said that the Americans will commit themselves to supporting the US economy despite the tumbling stock market. They pointed to the quarter point cut in interest rates announced by Alan Greenspan, head of the Federal Reserve, last week as an example of what could be done. Further cuts are now anxiously awaited.
British support for the American rate cut have raised expectations of a similar cut in Britain this week and continental support for interest rate cuts is vital. European central bankers have said they are opposed to any interest rate reduction ahead of the launch of the European single currency. But currency markets fear that if the US is left to cut rates virtually on its own, the dollar will plunge.
Meanwhile, Japan's Finance Minister, Kiichi Miyazawa, has proposed a $30 billion rescue package to help Asian countries.
telegraph.co.uk |
