Darling: 'Cut out the careless talk'

Last Modified: 06 Oct 2008
By: Alice Tarleton

'Providing a running commentary could add uncertainty in already febrile market conditions,' the chancellor told MPs today.

The government will do "whatever it takes to maintain stability" in the financial system, the chancellor, Alistair Darling, told the Commons today.

Darling said "all practical options must remain open" in tackling the financial crisis, but discouraged speculation on the specifics of future action.

'These are exceptional times and I have no doubt about the size of the task facing us and governments across the world.'
Alistair Darling

Since April, the government and the Bank of England's special liquidity scheme has made £100bn long-term funding available to banks. Another £40bn will be injected tomorrow, Darling said.

Tomorrow, the compensation guarantee for savers - in the event of a bank going under - will be increased from £35,000 to £50,000. The chancellor said the FSA was consulting on whether to increase the limit further.

The Bank of England, which sets interest rates, will be given a statutory role to maintain stability, and will do whatever it takes to keep the system liquid.

George Osbourne's response

The FSA is considering changes to remuneration structures, Darling said.

Darling welcomed the $700bn bailout plan which was approved the US Congress on Friday.

But he talked of the need for European governments to work closely together, and for quicker action.

"These are exceptional times and I have no doubt about the size of the task facing us and governments across the world," he said.

Vince Cable's response

Darling stressed the importance of both taking action to support the banking system as a whole, and intervening in individual cases where necessary. It was not enough to do one or the other, he said.

Darling said Northern Rock, which was taken into temporary public ownership in February, has now paid back more than half of the taxpayers' money that was lent to it.

The bank continues to repay its loan ahead of schedule, he said.

Markets have tumbled today, with the FTSE 100 falling 5 per cent to a four-year low. Shortly before the chancellor spoke, the Dow Jones index fell below the psychologically important 10,000-mark for the first time in four years.

Financial trading on the Icelandic stock exchange has been suspended.

This morning the prime minister, Gordon Brown, chaired the first meeting of the National Economic Council - an 18-strong "war cabinet" of top ministers and officials to deal with the economic crisis.