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G8 and G20 Summits

The message is clear: countries that face big fiscal challenges have to address those challenges. Let me put it the other way around: for countries like us, with an 11% budget deficit, further fiscal action—or, indeed, no action—could lead to a serious problem with our economy. Where I agree with my hon. Friend is that when we tighten fiscal policy, as we should, that should be accompanied by a loose monetary policy. That is why I made the remarks that I did about the importance of not bringing in the banking rules too quickly, and why the Bank of England's positive response to the Budget that my right hon. Friend the Chancellor introduced is so encouraging. However, for Britain, the right measure, as the G20, the EU and the OECD say, is to deal with our deficit. If we do not, we could be in real danger.