G8 and NATO Summits

John Redwood Excerpts

Wednesday 23rd May 2012 Commons Chamber

[The Prime Minister]

I have great respect for the right hon. Gentleman, and he raises absolutely the right point. I would say that the German approach is changing, to an extent, because the Germans know that alongside deficit reduction plans, in a single currency, there needs to be greater co-ordination of that single currency. Their concern is that they do not want to take their foot off the deficit reduction until they have more of a political system around the single currency. I understand their concern. This is one of the reasons that I never wanted to join a single currency; I have always believed that a single currency involved a sort of single economic government. The struggle is to try to convince countries in Europe that, alongside deficit reduction, they need a more active monetary policy, a European Central Bank that stands behind the currency, and the structural reforms, such as completing the single market, that we have always argued for.

[Mr John Redwood (Wokingham) (Con)]

I welcome the emphasis on growth. Does the Prime Minister agree that the Bank of England and the banking regulators in the UK need to amend their method of operation to ensure that sufficient money and credit are available to fuel a private sector-led recovery, rather than simply providing more cheap money for the state? Could they not learn from America, which is doing that very well, in order to avoid the problems that Europe is being plunged into by doing it far worse than we are?

[The Prime Minister]

My right hon. Friend makes an important point. When I say “active monetary policy”, I do not simply mean a central bank that engages in quantitative easing, or whatever. We need to ensure that all the monetary institutions of a country, including its banks, are properly capitalised and properly working. Around Europe, there is a lot of work that needs to be done on that.