Subject: Economic Affairs
Chairman: The first question I have is a very general one. And that is, why is Britain in its worst recession for decades and how much are domestic events and policies to blame for Britain, at least in the eyes of the IMF, being in a particularly powerless state amongst developed countries?
Alistair Darling, Chancellor of the Exchequer:
Well the short answer to that is that we and I think most countries in the world now are now being affected by one of the severest downturns, that we have seen probably since the 1930s, and the primary reason for that is, what is loosely called the credit crunch, which is basically the seizing of the world's financial system.
And that has caused problems for us, it has caused problems for most other countries in the world, because we have such a large financial services sector, and also because of the nature of our housing market, we were bound to be affected to a greater extent than some countries.
But if you look at the forecasts that have been issued over the last few months, even in the last few days, Credit Suisse for example, whilst they have marked us down, in terms of their forecasts, they make the point that they think that Japan and Germany will be marked down even further.
Now you can draw no comfort from that at all, indeed quite the reverse, because those are countries to whom we might seek to export to, but the real problem that we face is that credit is certainly impaired, if not frozen, in many countries and that is impeding our ability and when I say our, I mean, economies across the world, the ability of these economies to recover. There are obviously lessons to be learnt in many areas, but in particular there are lessons to be learnt in relation to how we have supervised and regulated the world's banking system, and that is no doubt something that you will want to explore.