April 2009

When the Obama phenomenon came to London for the G20 summit it showed that the hope and confidence he brought to the United Stated does travel well across the Atlantic.  But be under no illusions – the problems facing world leaders at the London Summit are big and real. 

We know the origin of the problem.  The excesses of banks in the United States, mirrored to an extent at this side of the ocean, provoked a crisis and the credit crunch.  The effect on the real economy is being felt here in North Tyneside with businesses and jobs under threat.

I don’t believe that history repeats itself but I do believe we can learn lessons from history.  Eighty years ago the Wall Street Crash sparked a financial and economic crisis.  There was even a London Summit. 

The tragedy was that countries chose protectionism and sharply cut back on public spending.  The economy, they said, would right itself.  The result was that recession turned into a depression which was longer and deeper than it needed to be.  All Labour could do was standby and watch.

It’s probably easier to advocate cuts in spending and jobs.  It’s harder to hold your nerve and build a way to a better future.  In President Obama and Prime Minister Gordon Brown we have two leaders who share a common view.  They believe in active government and both recognise the need for better regulation of the financial system.  They recognise the need to invest to restore economic growth.  Serious situations require strong leadership.

What happened at the London Summit is crucial for the world economy – but the real test will be what the effect will be in places like North Tyneside.