Government of France: Meetings

Lord Peston Excerpts

Tuesday 12th June 2012 Lords Chamber

[Lord Howell of Guildford]

Yes, we all have to join in the efforts to bring about recovery and end recession in our region and globally. These are matters that we discuss closely with the French. We agree with some of the ideas behind the various projects which Monsieur Hollande has put forward—what has been called the “Hollande vision”—but disagree with others. We have a perfectly amicable difference of view on, for instance, a financial transaction tax, which we believe would be damaging and would, according to the European Commission’s own analysis, take €200 billion out of the European economy. However, on other ideas of Monsieur Hollande—project bonds for infrastructure expansion, for instance—we concur. We reject the idea that there are two alternative strategies that are exclusive: austerity or growth. The answer is that sound budgetary discipline and growth all go together in a sensible and balanced programme.

[Lord Peston]

My Lords, do I understand the Minister to be saying that Her Majesty’s Government do not intend to tell off President Hollande for pursuing his foolhardy expansionary policies and not following our contractionary policies with all the enormous benefits of rising unemployment?

[Lord Howell of Guildford]

The noble Lord should not understand that, because I find his question rather hard to understand as well. The polarity of argument that he poses simply does not exist. The aim of Governments throughout Europe and throughout the global system is to restore expansion. We welcome the ideas of the French and of Monsieur Hollande where we think they would go in that direction, just as I think France and all responsible countries recognise that there has to be tight budgetary discipline as well, otherwise the efforts to expand if they immediately jack up interest rates would simply cancel out the policy. There is a matter of balance, and the noble Lord is better than most at understanding the need for balance in economics rather than one side or the other.