G8 and G20 Summits

Peter Tapsell Excerpts

Monday 28th June 2010 Commons Chamber

[Mr Speaker]

Order. Many right hon. and hon. Members are seeking to catch my eye, so brevity is required, a legendary example of which will, I know, now be provided by the hon. Member for Louth and Horncastle (Sir Peter Tapsell).

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

Is part of President Obama’s message to the leading industrial countries of continental Europe not to move too rapidly or too severely in cutting back on public expenditure or the money supply lest they precipitate a slump, as occurred in the case of Credit Anstaldt, as a result of applying similar policies, led by Germany?

[The Prime Minister]

The message is clear: countries that face big fiscal challenges have to address those challenges. Let me put it the other way around: for countries like us, with an 11% budget deficit, further fiscal action—or, indeed, no action—could lead to a serious problem with our economy. Where I agree with my hon. Friend is that when we tighten fiscal policy, as we should, that should be accompanied by a loose monetary policy. That is why I made the remarks that I did about the importance of not bringing in the banking rules too quickly, and why the Bank of England’s positive response to the Budget that my right hon. Friend the Chancellor introduced is so encouraging. However, for Britain, the right measure, as the G20, the EU and the OECD say, is to deal with our deficit. If we do not, we could be in real danger.