Global Economy

Alun Cairns Excerpts

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

We abandoned the Bretton Woods arrangements in the early 1970s, so it has been a while since we have operated under those international arrangements. Let me, however, make a few observations, because the hon. Gentleman has made a serious point about the eurozone.

I think that it would be disastrous for Britain’s economy if the eurozone were to break up, and I think that it would also be disastrous for the economies of the eurozone themselves. It would lead immediately to a balance of payments crisis in many European countries. That is why it is in our interests for the eurozone to work. Some of us questioned whether it was right to go ahead with it 15 years ago—we certainly did not want Britain to be part of it—but it exists now, and, as I have said before, “I told you so” is not an economic policy for today.

I agree with the hon. Gentleman that we need better international arrangements to monitor and deal with global imbalances. For instance, there are currently huge creditor countries such as China, and big debtor countries such as the United Kingdom and the United States. I am afraid that progress on that at the G20 and the International Monetary Fund is painfully slow. At some of the meetings, it has not even been possible to agree on the definitions. I hope that, if there is a silver lining to the present black cloud of the financial market crisis, we will see at the autumn meetings of the various institutions much more progress towards the arrangements that I think everyone accepts should be in place.

[Alun Cairns (Vale of Glamorgan) (Con)]

I congratulate the Chancellor on the deficit reduction programme that has secured the United Kingdom’s triple A rating, but can he tell us what analysis he has made of the rising price of gold, and how much better off the UK economy would be if the last Government had not sold off our gold in the same way?

[Mr Osborne]

I expected that that question might arise, as it often does at Treasury events. As people will have seen, the price of gold has hit a record high of $1,800. It was $300 when the shadow Chancellor sold our gold stocks. As a result of that action, this country has lost £12 billion.