My hon. Friend is right in parts. Of course, the overwhelming problem was deflation, but how the world reacts to deflation decides whether it will manage to come out of it properly. There is always a case, in specific areas, for really well targeted tariff protection, but overall, the world system has to remain open to growth. We have to accept that 70 per cent. of world trade comes from developing nations. Without that contribution, the whole world's growth would slow down. It was not until the Bretton Woods economic summit in 1945 that the world was able to unite to agree a new international economic and financial architecture that laid the foundations for half a century of peace and prosperity.
The G20 meeting this week is a huge opportunity for world leaders to agree to stimulate the world economy as much as is necessary, either this year or next, depending on their specific circumstances; to continue to take the measures necessary to restore trust in the banking system to get credit moving again; and to design a system to minimise the risk of any repetition in future. It is clear that, to date, Britain has been leading the way on the international stage, arguing for bank recapitalisation, designing an innovative scheme to protect and insure banks against toxic assets, and putting in place a significant monetary and fiscal easing to stimulate the economy and get growth going again—policies that are being replicated, in one form or another, around the world. Indeed, only this morning the OECD said, in an interim report on the world economy that it produced to inform the G20 meetings:
"While some have dubbed this severe global downturn a 'great recession', it will remain far from turning into a repeat of the 1930s Great Depression, thanks to the quality and intensity of government policies that are currently being undertaken."
Mr. Osborne talks about fighting domestic battles on an international stage; I would argue that it is the Conservative party that has been attempting to do that. Unfortunately, the debate at home has constantly been subject to distortion from the Conservative party, so I want to take a moment to explore some of its hypotheses before outlining the measures that I think that we ought to take, as well as some of the most pressing risks to the current approach taken by the Government, particularly for those in the developing world.
Let me start with the statements of the Leader of the Opposition. I was reading a speech that he made last week, which continued his well-worn theme, attributing the cause of this recession to the weakness of the British economy. He said:
"Our banking system is not separate from our economy, it is a reflection of it...The unsustainable debts in banks are a reflection of the unsustainable debts in our households, our companies and our government."
At first sight, that seems a completely unremarkable thing to say, as well as politically expedient. But unfortunately that leads him and his party to formulate completely the wrong policy prescriptions to deal with the current crisis, because he continues:
"So while of course it's true that some of our problems are global...we've got to recognise that the underlying policy failures were national."
I do not know of any serious economic commentator in the world who says that this synchronised global downturn is due to British national policy mistakes.
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