The world economy needs growth not austerity

Labour Party

Throughout sovereign debt crisis in the Eurozone, British commentators and, unfortunately, politicians as well, have failed to understand the nature of the beast. Unless and until the British accept that the Euro is a political as much as an economic project we will continue to talk in terms of Euro failure and eventual break-up.

Much though the feral Tory Eurosceptics who sit on the right-wing of their already right-wing party would love to see the Euro collapse, the more sensible among us should get real, knowing that this will quite simply not happen. The Euro is here to stay. David Cameron, hectoring the Eurozone countries to put their house in order while the UK flounders in a double-dip recession, admits as much.

Both the political nature of the Euro as a unifying force and its ultimate durability were demonstrated in the result of Sunday’s election in Greece. The Greek people voted, albeit narrowly, for stability, choosing in New Democracy a party that, while demanding some let-up, will broadly follow the Eurozone’s demands. The Euro, despite the crippling demands for austerity, is popular in Greece. In fact, the idea of a single currency is generally hailed across the EU as the way forward and a force for good. It is Britain, Sweden and Denmark who are out on a limb, not the other way round.

The new Greek Leader, Antonis Samaras, meanwhile, does not want to go down the harsh austerity route outlined again by German Chancellor Angela Merkel. Samaras is right to seek some slack for Greece. While there is much Greece needs to do to put its own house in order by way of fighting corruption and making the population pay their taxes, further austerity will only make things worse.

In a welcome development, the French people have well and truly understood the ant-austerity message. Francois Hollande now has a clear majority in the National Assembly, ensuring that his growth plans will be approved. It is not only the French socialists who believe in action to stimulate economic growth and employment. President Obama is saying the very same things. At the start of the crucial G20 summit in Mexico there are two clear blocs – the right-wing pedlars of austerity and those who are more enlightened demanding an agenda for growth.

Labour Shadow Chancellor Ed Balls argued in yesterday’s London Evening Standard that we need a global growth plan and that every national leader should support Presidents Obama and Hollande as they seek to get the world economy moving. Given that the India’s massive economy is slowing down, such action is more urgent than ever.

If there is one overriding conclusion to come out of the Los Cabos G20 summit it is surely that “we are all in it together” as separate nation states linked by an ever more global economy. This is exactly the reason why the Euro will survive. We are increasingly living in a world where large power blocs hold sway – the United States of America, India, China. The European Union is on its way to achieving power bloc status.

Where, you may ask, is Britain? My answer is that the United Kingdom is at present moored precariously in no man’s land. I would also contend that although no-man’s land is not an ideal place to be, going it alone outside a power bloc would be disastrous. In today’s world, nation states are always stronger together than apart.