BLAME THE CREDIT CRUNCH
Both Darling and Prime Minister Gordon Brown blamed the housing market's problems on the global financial crisis that has now raged on for eight months because of the fallout from banks having investing in dodgy U.S. mortgage debt.
"Banks are unwilling to lend to each other and have less money to lend to each," Brown wrote in an article for a newspaper to be published on Sunday.
Darling, who on Friday attended a meeting of Group of Seven finance ministers and central bankers where policymakers banged heads on a way to end the crisis, said this is why banks had to make a full account of their losses very quickly.
"One of the best things to do is banks right across the world report the extent of their losses arising from investing in the U.S. housing market last year," Darling said. "If we do that banks will then have the confidence to start lending to each other again and that will help reopen the mortgage markets and will make a big difference to businesses and homeowners."
Darling said he would be meeting with the nation's main mortgage lenders.
The G7 told financial institutions on Friday they should now get their books in order in the next 100 days.
The government also wants international action to help bring down food price inflation, which Darling said is dealing a blow to developing countries.
The cost of rice, the staple diet for billions of people, has doubled this year. Wheat and dairy prices have also shot up even as rising energy prices are putting a strain on household budgets in every part of the world.
"Rising food prices are having a profound effect on developing countries...and also it is impacting in a different way, developed countries as higher food prices are feeding into higher prices which will have an inflationary effect," Darling said. "The IMF and World Bank should look at this problem."
The pound has been sliding sharply alongside the dollar against the euro in recent weeks but Darling had little to add on the G7's warning on Friday that it was concerned by excessive volatility in foreign exchange markets.
"The statement says what it says, it simply reflects the situation as it is since we last met in February. We quite deliberately chose our words and they mean what they say."
