LONDON (Reuters) - Prime Minister Gordon Brown said on Wednesday his priority was to lead the country through its current economic difficulties by unblocking the mortgage market to deal with falls in house prices.
“My aim and my priority is that we can lead the people in Britain through this economic problem and do so by taking the right decisions to get liquidity to the banks, to make sure that the housing market starts moving again,” he told BBC radio on the eve of local council elections.
“And we’ve got the house price figures that were announced today that we’ve got to deal with,” he said.
Mortgage lender Nationwide reported house prices falling for the six straight month in April on Wednesday to now stand 1 percent lower than a year ago, the first annual decline in 12 years. Another survey on Wednesday showed consumer confidence at its weakest since the economic slump of 1992.
After more than a decade in power, Brown’s Labour Party is trailing badly to the opposition Conservatives in the polls and is expected to fare badly in Thursday’s local elections.
Brown is hoping the economy will rebound in time for national elections which must take place by mid-2010 and the government has been offering banks extra liquidity and urging them to pass on interest rate cuts to their customers.
But Bank of England Governor Mervyn King has said he does not want to see the mortgage market return to where it was a year ago and that many of today’s financial problems were caused by the easy lending practices of the past.
On Tuesday, King also blamed the compensation culture of the City of London financial district where he said excessive risk-taking was rewarded with huge pay packages.
Asked if King was right, Brown said: “One of the problems that we’ve seen is that we’ve had excessive risk taking and at the same time we’ve now got risk aversion.”
“It was wrong to have off-balance sheet activities and it’s right that all these losses now be declared and put on the balance sheet.”
“The real problem that I’ve identified is the lack of disclosure of off-balance sheet activities. Now that cannot be allowed to continue,” Brown said.