Minister warns on protectionism

Lord Davies started his new job earlier this month

Countries that resort to protectionism during the global recession will be making "a huge mistake", according to the new Minister for Trade Lord Davies.

His comments came as strikes spread at refineries across England in protest at the use of foreign workers.

But Lord Davies, who joined the government from Standard Chartered Bank two weeks ago, told the BBC that open markets were "the right solution".

He added that Britain is still "an attractive place to invest".

Lord Davies, in his first broadcast interview since leaving the private sector, spoke to BBC Radio 4's The World At One from Davos where he is attending the World Economic Forum along with other political, economic and business leaders.

'Huge problem'

The former chairman of Standard Chartered said the mood at Davos was "sombre" but insisted that he remained optimistic, adding: "Global demand can come back, we just need to get through the eye of the storm in the financial services industry, which we are doing".

Questioned about whether more countries would resort to protectionism as they attempted to protect their markets, Lord Davies criticised that course of action.

"Increased protectionism would be a huge problem and a huge mistake," he said.

"The great thing about British trade and positioning is that we are a very open market - it's very important countries do not resort to protectionism - that is not the answer and not the way we'll get back to a thriving global economy."

Lord Davies also revealed that he was making progress in his efforts to free up credit to restart the car market, a role he took on as part of the government's �2.3bn loan guarantee plan for the car industry.

"We've got to try to recreate the securitisation market, which has been so important to the automotive market."

"Car sales are based on getting consumer finance - those loans are packaged together and then sold off."

"That market has dried up, so my job is to recreate it and find creative solutions - that is what I am going to do."