Page last updated at 21:06 GMT, Thursday, 8 January 2009

PM promises more lending measures

Gordon Brown (second from right)
Mr Brown was shown Liverpool's docks area ahead of the cabinet meeting

Gordon Brown has promised more measures to get banks lending and said cutting interest rates was an "essential part" of tackling the economic crisis.

Businesses were "worried" and homeowners needed more security, the PM said on a visit to Liverpool.

The UK must be a leader in "new type of world economy", with tourism among the areas to be expanded, Mr Brown added.

But the Tories accused him of a "lack of interest" in tourism, while the Lib Dems called his words "hollow".

'Urgent action'

Mr Brown and his frontbench team were in Liverpool for a two-hour cabinet meeting - the third to be held outside London since September.

It came on the same day as the Bank of England reduced interest rates to 1.5% - the lowest in its history - in an effort to stimulate lending.

Mr Brown told the BBC: "The interest rate cut is an essential part of the world wide action that has now got to be taken to deal with this global financial crisis."

We are in difficult world times. I don't think anybody is in any doubt about that
Gordon Brown

In a speech ahead of the cabinet meeting he said he had acted on the concerns felt by businesses, adding: "That's why we had to take urgent action a few weeks ago, when we had to recapitalise the banks - and we were the first country in the world to do it, but others have followed us.

"And that's why in the next few weeks we are looking at the measures we can take to take the next step, and take it with effect, and that is to get the banks to resume the lending that is necessary."

If banks did not lend to firms and homeowners, the UK would lose "an important function that is vital to every part of the country".

'Gathering dust'

The prime minister is on a tour of the English regions and Wales to explain how the government is handling the downturn.

He told 200 tourism chiefs gathered at Liverpool's Arena and Convention Centre that the city's regeneration was an example of how British tourism could benefit from burgeoning world tourism, as economies such as China and India develop.

He predicted the world economy would double in 20 years and added: "We are in difficult world times. I don't think anybody is in any doubt about that.

Rather than taking advantage of the weakened pound to increase the number of foreign tourists, the government has decided to cut the budget for overseas advertising further
Don Foster
Liberal Democrats

"We are seeing the birth of a new type of world economy and we have got to be the leaders of it."

But shadow culture secretary Jeremy Hunt said Britain's share of international tourism had declined by 10% under Labour.

"Labour's lack of interest in tourism has meant that one of our national crown jewels has been left to gather dust - just at the time when we need other industries to take up the slack from the crisis in financial services," he said.

For the Liberal Democrats, Don Foster said: "Gordon Brown's hollow words will do little to reassure the huge number of Britain's hoteliers and B&B owners facing bankruptcy.

"Rather than taking advantage of the weakened pound to increase the number of foreign tourists, the government has decided to cut the budget for overseas advertising further."

Car industry support

Meanwhile Downing Street has said Mr Brown will discuss the economic crisis with US Federal Reserve governor Ben Bernanke and German chancellor Angela Merkel in meetings in London and Berlin next week.

Earlier Business Secretary Lord Mandelson announced a 35m start-up programme for the North West region to help get new companies off the ground.

And chancellor Alistair Darling held a breakfast meeting with regional business leaders in Liverpool, including representatives from the car manufacturers Jaguar Land Rover.

He was asked to support a campaign calling on the government to provide a short-term loan or provide loan guarantees to Jaguar, which employs 2,200 in Merseyside and 13,000 in the West Midlands.

Mr Darling, speaking shortly before Nissan announced 1,200 job losses in Sunderland, said: "The car industry, Jaguar, GM, are very important to the North West, to the whole country.

"We are in constant touch with the industry, we will do whatever we can to support it."

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