Financial Crisis

Part of the debate – in the House of Commons at 4:22 pm on 20th January 2009.

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Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee 4:22 pm, 20th January 2009

As a socialist in the Labour party, I am attracted to the idea of the Swedish model, and if we were to adopt all the other facets of the economy of Sweden—or other Scandinavian countries—I would not mind including the little bit that the hon. Gentleman has just endorsed. However, that is not what we are discussing now, and the Labour agenda does not appear to contain the sweeping changes that would probably be on the agenda of anyone who wished to see a Swedish-style economy in Britain.

Let us return to the topic of today. I believe that in its first flush the recovery plan was correct, and the framework was correct. It was, without doubt, driven by the Government's ideas and responses, and it is right for us to endorse the Government's support for it. We debated this matter in December, although not all the Opposition Members who are present today may have been present then. However, there are five documents tagged to this debate, which I consider very important because they show how the situation is developing. We considered some of them back on 24 November.

Document 4938/08 concerns the response to the final crisis. It refers to the new financial architecture and dealing with the impact on the real economy. The aim was to develop the framework subsequently. The document that was tagged at the same time and could have been read with the same bundle referred to increasing the facility for medium-term balance of payments support for member states. One of the first things that happened was that Hungary found that the facility under EU structures was not capable of alleviating its balance of payments problems. In the old days, before the EU and the resulting co-operation, one country would have done down another, damaging its economic ability. I remember that happening under the Conservatives, and I remember very well similar attacks on the currency when I was a young member of the Labour party under the Wilson Government. However, the EU acted responsibly, and extended support for the Hungarian economy and any other economy facing balance of payments problems.

It is great that we are not now throwing other countries to the dogs to our advantage. We are not short-selling those countries. Sadly, the Government ignored their rule on short selling, and Barclays has been short sold in the past few days. We should never have removed that short selling restriction; we should have left it.

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