Ed Miliband has called for an immediate Group of 20 summit to chart a way out of the economic slowdown, insisting that David Cameron and other world leaders renounce collective austerity and instead commit themselves to a “global growth plan”.
The Labour leader says the world faces a “poisonous cocktail of economic peril” and bemoans a collective failure of political leadership. Mr Miliband accuses Mr Cameron of “standing on the sidelines”, although it is Barack Obama, the US president, and Angela Merkel, the German chancellor, who are more often criticised in financial circles.
Mr Miliband, writing in the Financial Times, believes that world opinion is shifting towards his view that too much austerity is part of the reason for the slowdown in developed economies, citing the views of Christine Lagarde, head of the International Monetary Fund.
“An immediate G20 should seek to build consensus around Christine Lagarde’s clearly expressed view that ‘slamming on the brakes too quickly will hurt the recovery’,” he says.
Mr Miliband’s call for global leadership harks back to the perceived success of the 2009 G20 summit in London in galvanising efforts to tackle the financial crisis.
The Labour leader argues that today’s economic turmoil is too important to be left to an “academic conference” of central bank governors meeting at Jackson Hole and the situation is too urgent to await a planned G20 meeting in France in November. He says world leaders need to tackle the “triple challenge of growth, debt and bank instability”, acknowledging that tough austerity measures are needed in countries such as Italy and Spain where borrowing costs have risen sharply.
But Mr Miliband craves international validation of his call for a plan B in Britain, arguing for a slackening in the pace of deficit reduction in an attempt to bolster growth.
George Osborne, the chancellor, claims that Labour is almost alone in the world in making such a case.
Mr Miliband’s critique of Mr Cameron’s allegedly passive role in the international economic crisis will strike a nerve in Downing Street and the Treasury.
Mr Osborne insisted last month that Britain would “continue to lead the international response in Europe and beyond”, but the mocking laughter on the Labour benches suggested he had yet fully to make that case.
The chancellor argues he is making constructive suggestions on how to deal with the eurozone crisis, even though Britain is excluded from key meetings in which operational decisions are taken. For example, Mr Osborne has urged eurozone leaders to follow “the remorseless logic” of monetary union by pursuing closer fiscal union, promising that Britain would not stand in the way.
However, as eurozone leaders tighten their co-operation, Mr Cameron and Mr Osborne run the risk of being left out when some of the big decisions are taken.
a British official says: “There are advantages to being in the room and there are disadvantages. The disadvantage is that if you are in the room, you will be asked to dip your hand in your pocket the next time they want to bail out another eurozone country.”
Britain’s ability to influence the debate may diminish further if eurozone countries decide to press ahead with deeper integration in response to a report by Herman Van Rompuy, EU president, in October.
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