The Eurozone avoids recession after the UK has sunk into double dip

Labour Party

The first meeting between President Hollande and Chancellor Merkel ended with a show of unity, at least on the surface, and a joint view that Greece should stay in the Euro. Meanwhile, as IMF head Christine Lagarde adds her voice to those who think Greece may have to leave the single currency, the Eurozone remains in crisis. The result of the next round of elections in Greece will be crucial for both that country and the Euro itself.

It is important at what may turn out to be the crossroads for the Eurozone that those who make these decisions do not get caught up in the general air of panic. There is no doubt the atmosphere in Europe is febrile, while the Merkel/Hollande meeting is being described as sober.

Yesterday I argued that Europe’s leaders must take on board the results of a recent poll in Germany as well as the national elections in France and Greece which produced winning results for candidates opposing austerity. Fortunately it looks as if this may be sinking in. Horst Seehofer, head of Germany’s CSU Party, sister party to Merkel’s CDU, is now calling for some element of growth.

Yet the Eurozone crisis and the problems in Greece are taking place at the same time as the Eurozone is keeping its head above water as far as recession is concerned. It was announced yesterday that the Eurozone had avoided recession thanks, interestingly, to stronger than expected German growth. Even France, sometimes seen as a problem due to its 35 hour week and generous pensions, recorded neither growth nor contraction.

This is not, of course, the case in the UK. At the end of April we were informed that the British economy had again sunk into recession putting us into the unenviable double-dip category. David Cameron, of course, blamed the Eurozone crisis. This claim looks less than tenable in the light of the Eurozone’s ability to avoid recession itself. In fact, according to a recent Sunday Times/YouGov poll 32% of people blame the return of recession on the Tory-led coalition.

Cameron and Osborne have, in fact, been fortunate that the Eurozone crisis has taken attention away from the British economy. Our economy is not doing at all well, as those who have lost their jobs and the young people who cannot find employment will tell you. In addition, the Bank of England has today revised its forecast for growth downwards. We are, in fact, seeing a re-run of the decimation of our society last seen under Margaret Thatcher in the 1980s.

The British people are, however, cottoning on to this. The local elections on 3 May showed beyond a shadow of doubt that they preferred Labour under Ed Miliband to this Tory-led coalition. Labour is on the way up, the Tories are going down and the beleaguered Liberal-Democrats seem headed for electoral wipe-out.

Hungarian Premier Orban seeks to out-Putin Putin

Labour Party

The European Parliament Socialist and Democrat Group earlier today expressed extreme concern at the antics of the right-wing Fidesz governing Party in Hungary led by the populist and dictatorial Viktor Orban.

On 1 January a new prescriptive constitution entered into force in Hungary which will slash the powers of the judiciary, the central bank and the media. Orban has also gerrymandered parliamentary constituencies to keep his party in power and cemented loyalists in key positions for nine years.

You may be forgiven for wondering what this new constitution and governmental set-up offers that differs in practice from the Stalinist era one imposed in 1949 which it aims to replace.  It would appear that Orban is intent on out-Putining Putin, despite his impeccable credentials as a dissident hero in the 1989 revolution. The Hungarian Civil Liberties Union activist, Szabolcs Hegi, is right when he says, “The constitution is an undemocratic law that came from an undemocratic legislative process.” And it gets worse, if that’s possible. Not content with decimating Hungary’s legal system, gagging its media and turning its government into a virtual dictatorship, Orban has also introduced a flat rate personal income tax.

He may have got away with this utterly regressive financial measure but for Hungary’s dire economic situation. As its economy falters, Hungary needs assistance from the International Monetary Fund in the form of its second bailout in four years. However, Christine Lagarde, the strong and determined head of the IMF, is not minded to grant such help while Hungary maintains the flat rate tax on income. She told CNN on Friday, “We’re not complacent. We don’t compromise.”

Meanwhile, last Monday 30,000 Hungarians protested against Orban and his government on the streets of Budapest and the incoming Danish presidency of the EU is facing pressure from its MPs at home to do something about Hungary. The European Commission is meeting in Copenhagen today and will discuss Hungary in some depth, although the Commission is not expected to come to a conclusion for a while yet.

It is, however, clear that the EU will not put up with a member state defying the acquis communautaire, the criteria required for a country to be admitted into the EU in the first place. Whatever its faults, the European Union is a bastion of democracy and the rule of law, and those of us elected to the European Parliament in the Socialist and Democrat Group will make sure the core values of the EU are consistently upheld by all member states.

Cameron and Osborne should support Gordon Brown to lead the IMF

Labour Party

I find David Cameron’s rejection of Gordon Brown’s bid to lead the IMF quite appalling. I always thought the Conservatives claimed to be patriotic, until recently singing “Land of Hope and Glory” at their annual conference. We now know they do not put Britain first, living up to Winston Churchill’s damning condemnation of a former Tory Prime Minister, Stanley Baldwin, whom he accused of putting party before country.

Since many believe Gordon Brown has excellent credentials for the IMF post, Cameron and Osborne’s attitude comes not from a desire to support the best candidate, but rather from narrow party advantage.

This Tory-led government would, indeed, find it difficult to blame Gordon Brown for Britain’s economic crisis while at the same time putting him forward for a high-level international economic job. If they came out for Brown, Cameron and Osborne may just have to admit that the global economic crisis had something to do with the parlous state of our economy. Since every Tory and coalition spokesperson has taken all possible opportunities to blame the last Labour government for our economic misfortune, the Tories would lose a major plank of their attack strategy were they to allow this particular rug to be pulled from under their feet.   

Quite simply this Conservative-led coalition prefers to support Christine Lagarde, the French Finance Minister rather than a former Labour Prime Minister in order to be able to attack Labour’s economic record. Gordon Brown is one of us, i.e. British, and should, I firmly believe, be our candidate for the IMF top job. There are times when country comes before party and this is one of them.

I completely agree with James Wolfensohn, former Director of the World Bank, quoted in the “Independent” today following his article in the “Evening Standard”, who said “Gordon Brown has proved that he has the leadership skills, the vision and the determination to bring the world together”. Gordon Brown has also been endorsed by Lord Skidelsky, a cross-bench peer and economic historian, not to mention Labour MP Tom Watson.