John Baron MP says Government policy is ‘economic claptrap’ in speech on Eurozone crisis

MP also criticises IMF and Eurozone policy

 Today, John Baron MP sponsored a Debate in Parliament raising concerns about our additional contributions to the Eurozone crisis via the IMF. John is very critical of Government policy and used the Debate to urge the Government to question the assumption that lenders to the IMF always get their money back, whether the IMF’s policy will work, and why the IMF is getting involved at all.

 John said:

 “The UK is doubling its IMF contribution to £20 billion. This recession is different from previous recessions. It is being caused by excessive debt rather than a lack of demand. We underestimate the extent of the crisis. £300 billion worth of Italian debt has to be rolled over shortly. China with its massive reserves wouldn’t help. The fact the IMF wants another £10 billion from us suggests they no longer have our original £10 billion.”

 “Additional IMF funding will not work. Such policy simply reinforces the Eurozone’s own flawed policy. After 15 conferences and summits, they have still not addressed the central cause of the problem which is a lack of competitiveness and excessive government spending. Debt is the problem, yet the IMF is piling more on.”

 “The existing policy ignores the important of devaluation to recovering prominence. Devaluation helps to take the strain by assisting competitiveness. The government makes great play of the fact that only three of the IMF’s 53 programmes are in the Eurozone. But the fundamental difference is that there is not one country in the 50 outside the Eurozone which cannot devalue.”

 “I further question whether the IMF should be getting involved. The Eurozone is a currency union. No US State would get IMF help. The same should be true of the Eurozone. Greece is no longer economically sovereign: it has no central bank; cannot set interest rates; and has no currency. Meanwhile, putting Christine Lagarde in charge of the IMF is like putting a debtor in charge of the debtors’ prison.”

 “The Government’s approach to this crisis and the Euro generally is flawed. The line ‘we must save the Euro’ is economic claptrap. Binding divergent economies into a single currency was and remains a massive mistake. Similar thinking warned us of the perils of leaving the ERM. The sky will not fall in if the Euro breaks up. In fact, trying to save the Euro may be making matters worse because it makes for bigger austerity cuts given devaluation is not an option.”

 Ends

Word Count: 426

Date: 15^th November 2011

 Notes to Editors

• Please see John’s article: http://www.epolitix.com/latestnews/article-detail/newsarticle/mp-calls-for-answers-on-the-uk-assistance-to-the-eurozone-through-the-imf/ 

• Please also see press releases:

• John Baron MP quizzes Government in Eurozone crisis Statement’ [3^rd November 2011],
• ‘John Baron MP questions Chancellor over UK’s liability in Eurozone bailout’ [27^th October 2011] and
• ‘John Baron MP votes for EU referendum’ [25^th October 2011]