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PM hopeful of Gulf financial aid
11-02-2008, 12:05 PM,
PM hopeful of Gulf financial aid
Quote:Gordon Brown has said he is hopeful that wealthy oil states will give extra financial support to help countries vulnerable in the current crisis.

Speaking after talks in Riyadh, Mr Brown said he believed Saudi Arabia would contribute to an IMF fund to help countries at risk of economic collapse.

He said it was in the interest of Gulf states to help international efforts to stop "financial contagion" spreading.

The prime minister also hinted at more global action over interest rates.

Global efforts

Ahead of the Bank of England's latest interest rate meeting on Thursday - in which it is widely expected to cut rates - Mr Brown said the "trend" of falling inflation and oil prices was giving policymakers more scope to act.

Talking of a consensus emerging from the current financial crisis of the needed for greater international co-ordination in policymaking, Mr Brown said world leaders would discuss further co-operation at their meeting in Washington later this month.

"I think we are grasping towards a new global order where there will be far better global co-ordination in the future and where people will work together to solve common problems," he said.

Mr Brown is in the Gulf to ask states to do more to stabilise oil prices and help tackle the global economic crisis.

The prime minister, who is being accompanied by Business Secretary Peter Mandelson and Energy Secretary Ed Miliband on the trip, will move on to Qatar later on Sunday.

He wants Gulf states to contribute to an International Monetary Fund bail-out 'pot' for countries with failing economies.

There is concern among some observers that as more nations - most recently Iceland, Hungary and Ukraine - apply to the fund for help, its reserves may not be sufficient.

Mr Brown said the prospect of more countries defaulting on their financial commitments risked greater instability for the financial system and could ultimately affect families in the UK.

Mr Brown also wants the Gulf states to invest more of their huge financial reserves in Europe.

The IMF estimates the region's sovereign wealth funds - centred on the assets of Gulf royal families - are worth between $2-3 trillion and are expected to rise between $7 trillion and $11 trillion by 2013.

The growing importance of Middle East capital was demonstrated on Friday when it emerged that Barclays had raised £7.3bn from investors including the Qatari and Abu Dhabi royal families.

Oil stability

The prime minister is keen to use his visit to persuade Gulf nations to maintain their oil production levels to avoid "spikes" in oil prices.

Addressing oil prices, he said: "I want to see more stability as well as a lower price."

Turning to the state of the UK economy, where his plan to increase borrowing has been criticised by the opposition and some economists, Mr Brown said all countries were having to invest more to support their economies during the current period.

"The first priority has to be to get the economy moving and that is the action were are taking," he said.
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