Cameron offers the eurozone advice

The PM offers advice to Europe but suggests little change at home.

David Cameron has made his big speech on the economy and the eurozone, focusing on the "three challenges" which Britain faces:

First, the struggle to recover from a long and deep recession at home.Second, the turbulence coming from the Eurozone. And third, the uncertainty over whether the world is on the right economic path, with debates about trade policy and how to support growth.

On the recession, the recent switch in emphasis from getting spending under control to building a sustainable plan for growth was in evidence. Cameron highlighted the reform to the planning regulations, which scrapped over 1000 pages of rules, the creation of 24 enterprise zones, and the regional growth fund. The latter has been panned as a costly mistake, but the Prime Minister suggested that it is on track to create 324,000 jobs – almost ten times as many as the National Audit Office predicted.

Internationally, Cameron was intent on offering advice which he doesn't seem to be particularly qualified to give, and which none of the recipients really want. He highlighted three things which the euro countries should do to keep the currency functioning properly:

First, the high deficit, low competitiveness countries in the periphery of the Eurozone do need to confront their problems head on. They need to continue taking difficult steps to cut their spending, increase their revenues and undergo structural reform to become competitive. The idea that high deficit countries can borrow and spend their way to recovery is a dangerous delusion.

Yes, point one: austerity! Of course, Italy and Spain are actually textbook practitioners of austerity already, and it hasn't done them a lot of good. But Cameron does also echo our leader today in calling for Germany to loosen monetary policy to make up for the absence of fiscal expansion, saying:

Germany’s finance minister, Wolfgang Schäuble is right to recognise rising wages in his country can play a part in correcting these imbalances but monetary policy in the Eurozone must also do more.

Cameron's second point calls for "governance arrangements that create confidence for the future":

As the British Government has been arguing for a year now that means following the logic of monetary union towards solutions that deliver greater forms of collective support and collective responsibility of which Eurobonds are one possible example. Steps such as these are needed to put an end to speculation about the future of the euro.

More collective support will irritate the already fuming Andrew Lilico, who wrote on Conservative Home today that Osborne and Brown should face criminal charges for the help already extended to Greece. Lilico wrote:

It cannot be acceptable for UK bureaucrats and ministers to act in clear defiance of the law, and then lose billions of pounds as a consequence of their nakedly illegal acts. That isn't just "one of those things". It is, in principle, actionable in much the same way as if the chief executive of your council acted clearly against the law and lost money by doing so. Ministers are not above the law, and are not entitled to defy Treaties, losing billions of pounds in the process, just because it seemed convenient to do so at the time.

Thirdly, Cameron argues that "we all need to address Europe’s overall low productivity and lack of economic dynamism":

Most EU member states are becoming less competitive compared to the rest of the world, not more. The Single Market is incomplete and competition throughout Europe is too constrained. Indeed, Britain has long been arguing for a pro-business, pro-growth agenda in Europe.

Cameron claiming a pro-growth agenda in Europe could be seen as faintly ironic. Lest we forget, Britain contracted last quarter while the eurozone merely stagnated. Perhaps this could be the government's new excuse for Britain's economic woes: we're pushing so hard for growth in Europe that we forgot to get any back home.

One line from Cameron was particularly welcome, however. Speaking about the right economic path to take post recession, he announced:

I’ve asked the Treasury to examine what more we can do to boost credit for business, housing and infrastructure.

We’ve taken the tough decisions to earn those low interest rates – so let’s make sure we’re putting them to good use. Building recovery is hard work because we are not reinflating the bubble but building a new model of growth. Some people asked why we didn’t have more economy Bills in the Queen’s Speech.  If you could legislate your way to growth, obviously we would. The truth is you can’t.

Despite the fact that many would argue that our low interest rates aren't "earned" at all, but merely a fortunate outcome of our low growth expectations, if we have them, we certainly should be using them. Let's see how the Prime Minister intends to do that.

Greek shoppers in Athens. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leader: Trump and an age of disorder

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions.

The US presidency has not always been held by men of distinction and honour, but Donald Trump is by some distance its least qualified occupant. The leader of the world’s sole superpower has no record of political or military service and is ignorant of foreign affairs. Throughout his campaign, he repeatedly showed himself to be a racist, a misogynist, a braggart and a narcissist.

The naive hope that Mr Trump’s victory would herald a great moderation was dispelled by his conduct during the transition. He compared his country’s intelligence services to those of Nazi Germany and repeatedly denied Russian interference in the election. He derided Nato as “obsolete” and predicted the demise of the European Union. He reaffirmed his commitment to dismantling Obamacare and to overturning Roe v Wade. He doled out jobs to white nationalists, protectionists and family members. He denounced US citizens for demonstrating against him. Asked whether he regretted any part of his vulgar campaign, he replied: “No, I won.”

Of all his predilections, Mr Trump’s affection for Vladimir Putin is perhaps the most troubling. When the 2012 Republican presidential nominee, Mitt Romney, warned that Russia was the “number one geopolitical foe” of the US, he was mocked by Barack Obama. Yet his remark proved prescient. Rather than regarding Mr Putin as a foe, however, Mr Trump fetes him as a friend. The Russian president aims to use the US president’s goodwill to secure the removal of American sanctions, recognition of Russia’s annexation of Crimea and respect for the murderous reign of the Syrian president, Bashar al-Assad. He has a worryingly high chance of success.

Whether or not Mr Trump has personal motives for his fealty (as a lurid security dossier alleges), he and Mr Putin share a political outlook. Both men desire a world in which “strongmen” are free to abuse their citizens’ human rights without fear of external rebuke. Mr Trump’s refusal to commit to Nato’s principle of collective defence provides Mr Putin with every incentive to pursue his expansionist desires. The historic achievement of peace and stability in eastern Europe is in danger.

As he seeks reconciliation with Russia, Mr Trump is simultaneously pursuing conflict with China. He broke with precedent by speaking on the telephone with the Taiwanese president, Tsai Ing-wen, and used Twitter to berate the Chinese government. Rex Tillerson, Mr Trump’s secretary of state nominee, has threatened an American blockade of the South China Sea islands.

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions. The US constitution, with its separation of powers, was designed to restrain autocrats such as the new president. Yet, in addition to the White House, the Republicans also control Congress and two-thirds of governorships and state houses. Mr Trump’s first Supreme Court appointment will ensure a conservative judicial majority. The decline of established print titles and the growth of “fake news” weaken another source of accountability.

In these circumstances, there is a heightened responsibility on the US’s allies to challenge, rather than to indulge, Mr Trump. Angela Merkel’s warning that co-operation was conditional on his respect for liberal and democratic values was a model of the former. Michael Gove’s obsequious interview with Mr Trump was a dismal example of the latter.

Theresa May has rightly rebuked the president for his treatment of women and has toughened Britain’s stance against Russian revanchism. Yet, although the UK must maintain working relations with the US, she should not allow the prospect of a future trade deal to skew her attitude towards Mr Trump. Any agreement is years away and the president’s protectionist proclivities could yet thwart British hopes of a beneficial outcome.

The diplomatic and political conventions embodied by the “special relationship” have endured for more than seven decades. However, Mr Trump’s election may necessitate their demise. It was the belief that the UK must stand “shoulder to shoulder” with the US that led Tony Blair into the ruinous Iraq War. In this new age of disorder, Western leaders must avoid being willing accomplices to Mr Trump’s agenda. Intense scepticism, rather than sycophancy, should define their response.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era