Darling: Crisis is significant

17-01-2008

Darling: Crisis is significant
Alistair Darling has admitted that the current financial turbulence is "significant" and required "rapid action".

The admission comes as the chancellor may be forced to nationalise the failing Northern Rock bank, after it was rocked by fallout from the subprime mortgage market collapse in the US.

"We are facing an enormous problem. We will discuss it again at the meeting of the G7 in Tokyo in February and in the framework of the IMF [International Monetary Fund]," Mr Darling said in an interview with European newspapers last night.

The minister suggested that an "early warning system" should be set in place via the IMF to avoid future crises. Mr Darling is set to meet today with finance ministers from France, Germany and Italy to discuss a response to the crisis.

"The response to the recent financial turbulence must be international," a Treasury spokesman said following the chancellor's comments.

"Britain is leading that process with our European partners to ensure that any efforts are coordinated, measured and principle-based."

British companies' quarterly statements regarding the crucial Christmas trading period have generally been gloomy, with the credit crunch showing an impact on consumers' holiday retail spending.

Mr Darling declared: "What markets want above all, is to know that central banks are aware of their problems. I would add that authorities have to do their part but it is up to companies to be more transparent for markets."

He went on to say he was optimistic about the world economy and had faith in the UK's economic fundamentals, but that he had cut Britain's 2008 growth outlook for October to between 2.0-2.5 percent of gross domestic product.

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