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On the credit crunch crisis, given that it’s now known that Alistair Darling knew in mid-August - and I assume that you did as well – of Northern Rock’s problems, do you feel that you could have acted earlier, or done more?

GB: We are looking at events that started off in America, were happening in Germany, are impacting on every single industrial economy, and where every economy, including that of Britain, was bound to be affected from really issues that started in the mortgage market in the United States of America. And I think it’s our strength as an economy that has enabled us to be able to help the depositors in Northern Rock in a way that we’ve been able to guarantee. And I think it’s also the structure that we’ve built up over the years … because in 1997 and 1998 we had a Russian and an Asian crisis, then we had the trebling of oil prices a few years ago. We had an American downturn. You know at each point when we’ve had to deal with the problems, and face these challenges, the British economy has proved itself strong and stable and capable of withstanding difficult international events as they arise. We will always be vigilant and never be complacent. And I think that you will have seen that in the way that Alistair Darling has dealt with the events of the last few days.

Were you worried though at all that it could derail your government?

GB: I think vigilance is obviously essential, and I think that people have seen in the last few days how, by taking decisive action, we’ve been able to deal with the particular issues that arose from Northern Rock, but equally there was more liquidity available in the economy as a result of decisions that have been made. And I think that we are dealing with a problem that essentially did not start here. It’s a problem that started in America, has actually impacted as you’ve probably seen in Germany other parts of Europe. And the question is how we, like every other country, face up to these challenges. And I think that we’ve proved over the last ten years that the system with the Bank of England independence, a tripartite system involving the FSA, the Treasury and the Bank, we are able not only to deal with problems as they arrive.

You don’t think that anything could have been done more swiftly over last weekend or in the last seven days at all, that anyone is to blame here?

GB: I think that, I mean obviously there’s all these articles and you know the Treasury select committee is looking at these issues, but I think that when people look at what’s happening in America and Germany and in all these other countries, they will see that it’s the strength of the British economy that’s allowed us to be able to take the actions that have been necessary.

Mervyn King was talking about the problem with being bound by legislation. Are you planning any new laws in this area?

GB: Well, I think that’s a matter for Alistair Darling. I think that he’s already indicated that the Treasury have been looking at these matters for months.

I mean, on the wider issue of people borrowing, you know, something like 6 times their salaries over the past ten years and so on, how do you feel about that, is that something that just generally, culturally we need to think again about at all?

GB: I think that Alastair Darling, the chancellor, made some comments on that a few days ago and I’ve really got nothing to add on it. I mean, I think the most important thing looking at…

I’d like to hear it from you though

GB: Looking at the position of individuals in our economy, if you look at the level of inflation, we had, as a result of the trebling of oil prices and the feed-through into utility costs, you know, energy crisis, electricity, gas prices, we had to deal with a problem of inflation, a problem that was affecting every country. I think inflation in America went up to 4% and in the Euro area it went beyond 3% and we had to deal with the problem of inflation in our economy. I think you’ll see by the recent figures, inflation I think at the moment is at 1.8%, that by a tough approach to dealing with these issues, we have managed to bring inflation down. We will continue to be vigilant and bearing down heavily on inflation. Now, within that context, I mean, people make their individual decisions about the borrowings that they think they can make, but my duty and the duty of the chancellor, and he’s explained it in the first few days that he’s been in office, is to make sure that we keep the stability in the economy that gives us the low inflation and the low interest rates that are essential for its, um, success. You know, we took difficult decisions on public sector pay. These were not easy decisions because we staged the public sector pay rises. We had a reaction from a number of the different groups in the economy, and I can understand that they wanted to see the rise in one go. But I think people have come to understand that, you know, if we have got a duty to discharge, in keeping inflation low with the Bank of England, then we have to play our part on the public sector pay.

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