Osborne visits China, but can't escape Europe
Peter Hoskin 11:20am
Yet another day here in Westminster that's all about the economy. Nick Clegg has just
delivered a speech on the subject to Mansion House, focusing on ‘responsible capitalism’, which we'll blog shortly. And two prominent forecasting groups, the Ernst & Young ITEM Club
and the Centre for Economic and Business Research, have suggested that we're effectively back in recession. They both reckon that the economy shrank in the final
quarter of last year, and is wilting even further in this current quarter. But, like the OECD, they also predict that this ‘double dip’ will be relatively short-lived and relatively
mild.
Against that backdrop, enter George Osborne. The Chancellor spoke from the Far East on the Today Programme earlier, and delivered seven minutes of near-unalloyed reassurance. Yes, he admitted, we'll take a hit if the eurozone sinks, but he was quick to add that, ‘I'm confident the British Government is doing everything it can with a very difficult inheritance, facing a very difficult international situation to get Britain through this, to weather the storm.’
As for the government ‘doing everything it can’, Osborne's main emphasis was on a greater degree of cooperation between Britain and China. He's involved in a deal to make the City a major trading centre for the renminbi, and he stressed that British companies — from banks to IT types — should be doing all they can to service China's maturing needs. In return, he'll be asking China to contribute to British infrastructure projects because, well, we don't really have the money. It's the next part in the coalition's ongoing drive to court major new economies like China, of course, and India.
But, still, Osborne can't escape the old, faltering economies of Europe. When Evan Davis brought up the subject of further IMF bailouts, the Chancellor responded:
This is unsurprising, not least because Osborne was saying exactly the same thing last October. But it could still be controversial. It's not just that there was much disgruntlement the last time our IMF contributions were discussed in Parliament, but also that Osborne is making a hazy distinction about where the money would go to. It can only be used to ‘support countries not currencies,’ is how he put it earlier. But if more British cash is funnelled towards, say, Athens, then a lot of people will ask ‘what's the difference?’ — and Tory MPs among them.‘If the IMF believes it needs more resources — and I think it does — then … Britain has always been prepared to provide the resources in the past, and will be willing to provide resources in the future if there is a strong case.’
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alexsandr
January 16th, 2012 11:54am Report this commentozzy needs reminding its taxpayers money he is pledging to the IMF. I think most think we should keep money to pay down debt, not bail out bankrupt countries.
Rhoda Klapp
January 16th, 2012 12:18pm Report this commentSo he is trying to borrow money from China to build infrastructure, but planning to lend money he hasn't got to the IMF when he knows it will just go on a political attempt to defy gravity by delaying the demise of the euro? By what measure does that make any bloody sense at all?
exile on euro street
January 16th, 2012 12:33pm Report this commentThe reminibi seems to be a reference to a small person who swings both ways. The Chinese currency on the other hand is the renminbi.
Heartless Curmudgeon
January 16th, 2012 12:41pm Report this commentI'm sure it never crossed Mr O's mind, but the Hero of the H2B had a knack of going O/S to escape probs at home. (Pity he didn't stay there.)
whatawaste
January 16th, 2012 1:12pm Report this commentBy the same logic that Phil Hammond wishes to continue with buying the JSF F35-C, despite the recent testing in Florida which showed up the following defects:
1. A major design fault in placing the arrestor hook too near the undercarriage means that the aircraft makes it impossible to land on an aircraft carrier. This can be rectified but at cost.
2. The new plane will not be able to fire the British Asram air-to-air missiles. It is also untested in other areas so there may be further faults.
The Pentagon is considering scrapping the project as this would be good value for the tax payer. Funny how UK politicians do not care about this.
http://bfbs.com/news/uk/new-f35-c-fighters-future-doubt-54264.html
perdix
January 16th, 2012 1:13pm Report this commentI understand that commitments to the IMF would involve guarantees rather than actual loans.
Cynic
January 16th, 2012 1:18pm Report this comment"Britain has always been prepared to provide the resources in the past, and will be willing to provide resources in the future if there is a strong case.’" But there isn't a strong case, is there? It'll be used to prop up the living dead euro. Money down the drain. Osborne should just hand them Liam Byrne's note because "there is no money left". He's right to go to Asia, though. We need to develop our links with the rest of the world and leave the EU to sink under the weight of its own regulations and folly. In fact, we really need just to leave the EU.
Boudicca
January 16th, 2012 1:54pm Report this commentNot one penny of borrowed money, underwritten by UK taxpayers, should go to prop up a country in the Eurozone. That is effectively the same as propping up the Euro.
We should only contribute if that country decides it is time to leave the Eurozone and relaunch its own currency - in which case the IMF should set very strict terms.
France and Germany wanted the Euro: they should pay to prop it up.
Holly ......
January 16th, 2012 2:31pm Report this commentHa!!
Some folk do make me laaarf.
The Euro is not going to be allowed to fail.
The countries involed in it may change, but the Euro is here to stay.
Wishful thinking it away is just plain silly
Did we clamour to dumped the pound when Liverpool was in the same boat as Greece(Well near as damn it).
No, because that is our currency, the Euro is the currency of the countries using it.
We don't use the Euro so it's none of our business....If we are in looking to any knock-on problems relating to the current EU crisis, surely we would have the same problem whatever currency was in play. It is soveriegn debt, governments overspending/
overborrowing that is the problem here not the Euro, as such.
The same governments would have done the same thing whatever currency was in use.
Then what????
Pete Hoskin
January 16th, 2012 3:17pm Report this commentexile on euro street: Ah, well spotted! I've fixed that now, thanks.
Jeremy
January 16th, 2012 3:19pm Report this commentPeter Hoskin: "As for the government ‘doing everything it can’, Osborne's main emphasis was on a greater degree of cooperation between Britain and China. He's involved in a deal to make the City a major trading centre for the reminibi, and he stressed that British companies — from banks to IT types — should be doing all they can to service China's maturing needs. In return, he'll be asking China to contribute to British infrastructure projects because, well, we don't really have the money. It's the next part in the coalition's ongoing drive to court major new economies like China, of course, and India."
What a contrast to Labour's limited and inward-looking parochialism.
Good luck, Mr Osborne! If you make progress in these areas, you will have done much good for your country and much to secure her future prosperity.
Holly ......
January 16th, 2012 4:58pm Report this commentJeremy.3.19. Well said.
No one can deny the fact that Cameron,
Osborne & Co have pushed British business in non-European countries from day one. Except of course the British media, who are still in awe of the Labour luvvies.
The sooner we can sustain our economy to an extent where it is not so dependent on Europe for all our exports the better.
The British media will slate the Tories no matter what they do...Plain fact of life.
Misleading articles about yachts etc, done to keep the public angry is not really British Journalism, it is the lazy idle left, who still call the shots with our journo's for some reason.
Even after wrecking the economy/society they still love Labour.
Miliband the next PM.
YEAH RIGHT!!!
What a 'GIG' that would be eh???
Tw@ts.
Barbara
January 16th, 2012 5:01pm Report this commentI'm unhappy with lending anymore for the IMF, haven't we lent enough. If Osborne is telling China we need their investment, and we're borrowing to furnish the IMF then somethings seriously wrong. We now hear Gove saying we should have a royal boat, private investment, well wouldn't their money be better invested in business and jobs here instead of things that don't matter. If they want a royal boat they should provide one for themselves they've enough money between them all.
I amazes me that people forget we had riots here last summer, and people are out of work and on the dole. Having a new boat, although paid for by private scorces would rankle those without jobs. If theres money to invest it should be in jobs and business here for the export market if possible. Luxuries like boats take second place if not at the bottom. Is it gongs people are after? They don't have any meaning now either, as all and sundry have them for doing almost nothing.
Holly ......
January 16th, 2012 6:41pm Report this commentBarbara, correct me if I am wrong, but isn't building a yacht, from private funds, investing in jobs?...Golly I would even suggest the unthinkable...It WOULD actually create a few.
Just like the High speed rail link.
It might not be in the place many want it to be, but it is investment in our future infrastructure and will create jobs...
But hey let's just poo poo it, because they are not public sector pen pusher jobs, so they are NOT seen as 'real' jobs or investment in jobs at all.
Dimoto
January 16th, 2012 6:55pm Report this commentWhile Lagarde (Sarko's little helper), bosses the IMF, we can be sure she will fraudulently divert IMF funds to "the project", ECB stylee.
This Chinese deal is a strange one.
If it is pukka, it deserves headlines in all of the press, but Osborne is being strangely diffident (the Mail had a blazing headline but quickly downgraded it to a small item).
1) the "deal" is not yet signed ?
2) the "deal" is not exclusive, just the same facility offered to (say) France and Germany ?
3) The Chinese government has asked Osborne to be low-key, for fear of upsetting the jilted Germans (who made a big play to be "the RMB in Europe").
Any decent, investigative journos out there ?
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