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First Minister calls for 'substantial' cut in interest rates
08/10/2008
A substantial cut in interest rates offers vital assistance to the real economy, businesses and households in the current economic climate, First Minister Alex Salmond said today.
The First Minister was speaking at the second meeting of the National Economic Forum in Edinburgh today.
The First Minister said:
"I welcome the announcement by the Chancellor this morning to introduce a recovery package aimed at stabilising and securing the banking and financial sector as a whole.
"The package is substantial and is focused on injecting much needed liquidity and confidence into the system - rather than the previous practice of reacting to issues on an institution by institution basis, and that is extremely positive.
"l particularly welcome the action to release term lending into the system, in order to kick-start interbank lending and ensure that banks get back to their business of supporting the real economy in order to stave off economic downturn.
"And it is vital this week that we have a substantial cut in interest rates to ease lending conditions and provide a stimulus to the real economy.
"I believe that further measures are necessary, including comprehensive deposit protection in order to bolster confidence, and will make these suggestions in a totally constructive fashion.
"We are facing extraordinary and highly volatile circumstances and everything must be done, that can be done, to protect jobs, investment and household incomes.
"The Scottish Government is committed to protecting our real economy and should be in a position to use Scotland's financial resources fully to help reflate our economy.
"The £42 million underspend from 2007/8, currently held by the Treasury, is a strong example of how we could leverage support for our businesses right now, by accessing these resources.
"And the £120 million of Scottish money from the Fossil Fuel Levy currently held by OFGEM could and should be used for further investment in renewable energy for households and communities, without coming off our existing budget.
"These are both sensible measures in difficult times.
"Meanwhile, the Scottish Government will examine all means within our devolved responsibilities to accelerate investment and support economic activity in Scotland.
"Scotland is not immune from global trends, but our key economic indicators remain positive - with lower unemployment and higher levels of employment than the rest of the UK. Our renewable energy sector in particular is thriving with recent investments totalling almost £1 billion, and our Year of Homecoming in 2009 is creating a boom in Scottish tourism despite these challenging times.
"When you have exceptional circumstances, substantive actions are needed to provide stimulus and demand to the real economy.
"No-one can do this alone. In Scotland, we must work together - Government, business, trade unions, public sector, education and social enterprises - to help overcome these global challenges. The National Economic Forum has a pivotal role in this partnership working and the wider economic governance of Scotland.
"In the months and year ahead we must pull together and use our resources to the fullest extent and to the maximum benefit for the Scottish economy."