G8 and G20 Summits

Kelvin Hopkins Excerpts

Monday 28th June 2010 Commons Chamber

[The Prime Minister]

I had very positive meetings with President Hu of China and President Medvedev of Russia. We discussed, particularly in the Russian meeting at quite some length, the Iranian situation. It is encouraging that the Russians have voted for the sanctions resolution in the UN—resolution 1929—and it is important to show a united face to the Iranians about the unacceptability of their acquiring a nuclear weapon. The point is that nobody wants military action, by Israel or anyone else, to take place, and that is all the more reason for taking the sanctions route and trying to maximise the pressure and change the balance for Iran, to raise the costs for it of having a nuclear weapon. That is what this is all about.

[Kelvin Hopkins (Luton North) (Lab)]

Almost 80 years ago, countries across the world adopted policies of fiscal tightening and gave us the inter-war depression—the slump, with millions of people thrown out of work. We are now adopting policies of collective deflation. Is the Prime Minister not at all fearful that history might repeat itself and that we might see millions back unemployed?

[The Prime Minister]

It is quite difficult to talk about deflation when monetary policy is as loose as it is and when interest rates are as low as they are. This is where, with respect, the Labour party has not understood enough of the argument. We have to tighten fiscal policy in the UK. We are borrowing 11% of our gross domestic product. If we started borrowing more, or indeed we stood still, we could face the situation that others in Europe face—it is that serious—so where the demand should come from is by the combination of a fiscal tightening but with loose monetary policy. That is not the same thing that happened in the 1930s. The additional mistake made in the 1930s was to have trade wars, and hon. Members could hear from my statement just how hard this country is fighting to ensure that that does not happen.