Darling: UK must be determined
The UK must adopt the same determination in getting through the coming recession as it had towards the banking crisis, chancellor Alistair Darling will say tonight.
He will use the annual Mais Lecture at the Cass Business School to lay out his plans for the recession.
He will argue a new approach to economic policy is needed to reflect the new realities of a highly integrated global economy.
“Tonight I want to set out how governments should respond to this new challenge, which I believe demands a new response – both at home and abroad,” Mr Darling will say.
“We meet at a time of unprecedented turbulence in the world economy.”
“Many of the recent events in the banking system would have been unimaginable less than a year ago. Few predicted that each of the five large Wall Street investment banks would have, by now, either merged, sought government help or collapsed.”
Speaking about the sudden up take of Keynesian thinking, with the government taking a greater role in the running of economies, the chancellor will say: “Today, governments all over the world are using approaches that had until recently been consigned to policymaking history.
“But it is natural that the conduct of policy should evolve. Just as markets change, so should policy.”
However, he will explain while the mechanisms used by governments will change, the focus remains the same.
“But while the challenge we face today is different, our objective remains the same – to maintain a strong and stable economy – which is the only way to provide jobs, security, greater opportunity and increasing prosperity for the people of this country,” Mr Darling.
“Three weeks ago, we worked with other countries to put in place a plan to stabilise the banking system. These countries are committed to working together to strengthen supervision in the global financial system.”
“And today we need the same determination to support the wider economy. To ensure that fiscal policy supports monetary policy, here and across the world, in these exceptional circumstances.”
Yesterday Gordon Brown confirmed the government would be increasing borrowing to cover extra expenditure during the downturn.
“The investment that is necessary for the future will continue,” the prime minister said.
“That is the only way we can benefit from the new global age.
“The response of government is to invest to speed up economic activity. The responsible course at the moment is to use the investments that are necessary,” he continued.
