Last Saturday, along with Sarah and the children, we joined the crowds
at New Romney Country Fayre. Now in its seventeenth year it is a
fixture of summer on the Marsh and once again it enjoyed perfect
weather. It was great to see so many local businesses and voluntary
groups taking part and a record turnout of visitors. My
congratulations go to Frances Wire and her committee for another
successful event.
As the August sun shines down on another busy summer for our local
tourism businesses it would be easy to set concerns about the strength
of the world economy to one side. We can all breathe easy for a little
longer now that the American politicians have done a deal to let them
borrow the money they need to carry on paying their debts; the
eurozone has been kept together until next time; and the UK economy
continues with slow but, as the economists say, positive growth. But
the facts remain that in Europe and the United States there is too
little growth and too much debt.
Governments have to ‘live within their means’ whilst facing the
challenges of supporting spending and growth ‘in a responsible way
that doesn't mortgage our futures and leave a mountain of debt to
future generations.’ Whilst that endorses the strategy currently being
followed by our Government, the quotations are from remarks made by
President Obama.
The crisis in Europe is based on a crisis of confidence in the ability
of countries like Greece, Portugal, Spain and Ireland to repay their
debts to the institutions that have lent them money during the recent
recession. Confidence is the key word because as countries have to go
out and borrow money every day from the world financial markets any
concern about their ability to pay it back, whether or not they have
actually defaulted on any of their debts, means that the interest rate
they have to pay can go up dramatically. In the case of countries like
Greece, they have faced the problem that unless they can borrow new
money they can’t afford to pay their existing debts, which is an issue
for us because a lot of that debt is held by European banks. This
again shows why it was so important for our government to set out a
clear programme for how we would bring down our borrowing so that the
country is living within its means over the next four years. Failure
to do this not only runs the risk of triggering a new banking crisis,
but also putting up the costs of borrowing with higher interest rates
for consumers as well on mortgages and loans. The problems in Europe
are also made worse by the euro which forces poorer countries to
follow the same economy policies of wealthier ones. The solution for
countries like Greece, in the past, would have been to let their
currency reach a level which made their exports competitive and to set
the interest rates that suit them best. Outside the eurozone Britain
has the freedom to do this. Inside it, Greece and Ireland do not.