Gary's News and views

Gary Streeter MP for South West Devon

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.


Thursday, 25 November 2010

What can we learn from the crisis now unfolding across the Irish Sea?
Firstly, that we live in an inter-dependant world. Even if we were not in the EU with the Republic, we could not wash our hands as their banks and economy crash. We have billions of pounds worth of trade with our Irish cousins and if their economy turns turtle, it would impact our businesses severely. Irish banks owe billions of pounds to UK banks and if they were allowed to fail, it might drag ours down again too. This gives the lie to those who call for splendid isolation. The world is not like that anymore. Technology and open borders have made us economically dependent upon one another, like it or not. That is why co-ordinated action by the G20 has become so significant.
Second, it is a mistake to allow banks to grow too big to fail. Ireland, a country of only 6 million, has massive banks but a relatively small state. They do not have the scale or infrastructure to bail out their banks as we did in the UK and USA. Even here, there is an obvious limit to the extent to which the tax payer can support failing banks. We should seriously consider separating high street banks from their large investment arms that have caused the problems of the past 3 years by reckless lending and trading in security packages that even they did not understand. We should maintain vigilance even here in the UK because this is not over yet.
Third, thank heaven we are not in the euro, and if I have anything to do with it, never will be. The Irish problem is not just about the insolvency of their banks, it is about their inability in these past few years to implement policies to correct their economy from plunging into a colossal recession. Property prices have collapsed by 60% over there in the past few years. When the global downturn came, the Irish government needed to drastically slash interest rates and depreciate their currency to stave off economic disaster. Because they were locked into the straitjacket of the euro-zone, they were unable to do either of these things.
So we must learn lessons from this crisis over the water, and not walk by on the other side. In the twenty-first century, one thing is for sure: everybody is our neighbour. E-mail me on with your thoughts.

posted by Gary @ 09:20