Financial Crisis

Part of the debate – in the House of Commons at 3:56 pm on 20th January 2009.

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Photo of Philip Hammond Philip Hammond Shadow Chief Secretary to the Treasury 3:56 pm, 20th January 2009

No, I must make a little progress, if the hon. Gentleman will allow me.

The Government's response needs to spell out more clearly and emphatically where there may be a role for the EU and where the challenges that have to be tackled should be tackled multilaterally by the relevant Governments. Of course, the Government have a competitive claim of their own, which the Minister set out. The claim is that the actions taken by EU members are to the credit of the UK Government—that the UK blazed the trail and the EU followed. The Commission claims that national Governments acted according to

"a set of clear EU principles", but the UK response sees it rather as

"action taken by EU Member States, that built upon the measures...that were announced initially by the UK".

It is a diplomatic version of Punch and Judy.

Before I move on, I want to draw the House's attention to something buried in the preamble to the first paper. The Commission states:

"The shocks hitting the European economy are expected... to reduce the potential growth rate in the medium term".

That seems to me like a dose of common sense and realism, but it does not seem to be referred to anywhere in the Government's response, and as far as I can see, it is not reflected in the UK 2007 pre-Budget report, which assumes recovery of growth to a trend rate of 2.75 per cent. If that trend rate of growth is not recovered, there will be significant implications for the UK economy and the size of the future fiscal deficit. If the Government disagree with the European Commission's analysis of the likely future trend rates of growth and the impact of the financial crisis on those rates, why does the Government response not address that issue?

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