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G20 Summit

Volume 518: debated on Monday 15 November 2010

With permission, Mr Speaker, I would like to make a statement on my visit to China and the G20 summit in Korea. First, however, I am sure that the whole House will want to join me in welcoming the liberation, at last, of Aung San Suu Kyi. Her tenacity and courage in the face of injustice has been truly inspiring. I spoke to her this morning to pass on the congratulations of everyone in this country on her release and her remarkable stand on democracy and human rights. We must now work to ensure that her release is followed by freedom for more than 2,000 other political prisoners in Burma and that this becomes the first step towards the people in Burma genuinely being able to choose the person whom they want to run their country.

In China and Korea, my main focus was on jobs and growth. In China, I led one of the biggest and most high-powered British business delegations ever. This helped to win new business for Britain worth billions of pounds, involving businesses all over the UK and cities across China. We strengthened our ties on trade, education and culture, all the while raising our concerns with China on issues such as human rights where we have a difference of view.

In Seoul, Britain had four priorities, the first of which was to continue to win recognition for the importance of fiscal consolidation, with those countries with the greatest deficits taking the fastest action. The second priority was to get a clear commitment from all countries to fight protectionism and take the steps necessary to boost global trade. The third priority was to help move development issues up the G20 agenda, and the fourth was to address the global imbalances that were at the root of the global financial crisis and which still hold back growth in the world economy.

I believe that we made good and important progress on all four of those priorities and I will now take each in turn. First, on fiscal consolidation, it is now perfectly clear what the consequences are if we ignore the dangers of large deficits—we see markets questioning our economy, interest rates rising, confidence falling and the economy back in the danger zone. That is where Britain was only a few months ago, but because of the measures we have taken that is no longer the case. Countries with larger deficits need to act on them and do so now. That was exactly the view of the G20. In Seoul, we agreed that

“failure to implement consolidation would undermine confidence and growth.”

We also agreed to

“formulate and implement clear, credible, ambitious and growth-friendly fiscal consolidation plans”.

There can be no clearer statement of our collective intent.

Secondly, on trade, as the world comes out of recession with some countries moving more slowly while others, including the new emerging powers, forge ahead, there are inevitable pressures in some quarters for protectionism. The G20 has been a vital forum in fighting to keep markets open. Increasing trade is the biggest boost and the biggest stimulus we can give to the world economy. It does not cost any money, it is not a zero-sum game and it creates wealth and jobs. So, against a background of rising protectionist pressures, the G20 reaffirmed its determination to learn the lessons of the past and avoid the trade barriers and beggar-my-neighbour policies that wrecked the economy in the 1930s. It refreshed its commitment

“to keeping markets open and liberalizing trade and investment as a means to promote economic progress for all”,

and pledged to

“roll back any new protectionist measures that may have arisen”.

On the Doha round, let me say that it is incredibly frustrating that this trade round is almost 10 years old and that world leaders say again and again that it is going to be completed, but that the situation still remains stalled. The longer it has gone on the more difficult it has got, because the world economy has changed so fast that the deal has become outdated. Both developed and developing countries are looking for more from the round. I do not want to raise hopes artificially but I think that some real progress was made in Seoul.

The language of the communiqué refers to 2011 as the “critical window of opportunity” and crucially refers to the “end game” of the negotiations. As I proposed at the Toronto summit, we have to make the deal bigger by having a wide, across-the-board negotiation. What changed at this summit is that the US said that if a good and fair deal comes forward it will be taken to Congress, so we all instructed our trade negotiators to put more on the table so that a deal can be done. I am determined that Britain should do everything it can to push this agenda forward.

Thirdly, on development, it is right that the G20 is now playing a bigger role in this issue. As well as the very richest nations, the new emerging powers have a huge role to play in helping some of the poorest people and countries. There is a real recognition of the importance of trade, infrastructure and finance in the Seoul agreement. I also raised the importance of continuing our aid programmes. Britain is keeping its promises on aid and I pressed others to do the same.

On the trade agenda, together with South Africa and with Ethiopia and Malawi, which were there to represent Africa, Britain mobilised the G20 behind

“the vision of a free trade area”

for Africa. Only 10% of Africa’s trade is within the continent of Africa, so knocking down the trade walls between African countries can help unleash economic growth, which will benefit them and us, too.

Fourthly, on imbalances, there are huge trade surpluses in some countries and deficits in others. According to the IMF, such balances are forecast to get worse, not better. Alongside protectionist pressures, we have seen the sign of so called “currency wars”. The G20 agreed the Seoul action plan, which included agreeing to move

“towards more market determined exchange rate systems”

and to refrain from “competitive devaluation of currencies”. However, the issue of trade imbalances goes beyond currencies. Just as countries with big budget deficits must cut public spending, which is right for them and for the world economy, so countries with big trade deficits need to save more, consume less, and export more. If that is not accompanied by higher consumption by surplus countries, world growth will be lower and protectionist pressures higher and we will repeat the mistakes of the past. In the end, it is as simple as that. By acting together, we can maximise world growth and cut world unemployment. Imbalance is not some obscure economic issue; it is about jobs.

Trade imbalances have also led to an imbalance of funds—a wall of money in the east and a wall of debt in the west. That was part of the problem that helped pump up some of the bubbles that led to the crash that affected us all. As part of the Seoul action plan, we agreed that we would

“pursue the full range of policies to reduce excessive external imbalances and maintain current account imbalances at sustainable levels.”

The issue of imbalances will never be solved overnight, but the key thing is that it is being discussed in a proper, multilateral way, with some progress being made.

On other issues, the summit also delivered important progress on financial regulation and the reform of global institutions. To those who say that the G20 is not effective, I say that the last Basel accord on capital ratios, Basel II, took nine years. With the G20 behind it, Basel III has been done in just 18 months. Reform of the IMF to make it more representative of the global economy has been discussed year after year. The G20 has finally got the deal done.

On climate change, President Calderon briefed the G20 on the plans for Cancun and we received a report from the UN Secretary-General’s high-level advisory group on climate change financing.

This summit delivered important progress in managing the tensions that are present in the global economy. In my visits to China and the G20 summit, we have protected and promoted our national interests. We have taken vital steps towards the strong, balanced and sustainable global growth that we need. We secured recognition for acting on the deficit, support for more action on trade and development and agreement on working to rectify the imbalances that threaten global economic stability. Ultimately, this will win more jobs and growth for Britain, and I commend this statement to the House.

I thank the Prime Minister for his statement and advance notice of it. We should all agree with what he said about Burma. As we celebrate the freedom of Aung San Suu Kyi, we must remember that there is still a long journey before there is a free and democratic Burma. I also welcome the release of Paul and Rachel Chandler. I am sure that the whole House wants to send them its best wishes. I welcome the Prime Minister’s work on his visit to China.

Turning to the G20 summit, I welcome the South Korean Government’s success in keeping development on the agenda. Development aid is important for the lives it saves, but, as the Prime Minster says, it makes an important contribution to global growth. I also welcome the fact that he pressed the G8 countries that were in Seoul to keep their promises on aid, as we are.

Turning to climate change, will the Prime Minister tell us how the promises made at Seoul will be turned into action at Cancun? We welcome the continuation of work to reform the financial regulatory framework that was set in motion at previous G20 meetings. The increased stringency of the Basel committee’s capital requirements is a welcome step in making banks across the world more stable, but further work is needed to implement those reforms, and we recognise that that is difficult. Will the Prime Minister tell us how to balance the need for financial stability with the need for economic recovery and growth?

We all know that, for the UK, global economic growth is always important. We are a trading nation. Jobs in this country depend on strong exports, which in turn depend on a growing global economy. Will the Prime Minister acknowledge that that dependence is even greater because of the decisions that he has taken on the economy here at home? Cutting public spending and increasing VAT will dampen domestic demand, and that will hit jobs. The Office for Budget Responsibility has shown that because of the cuts that he is making, Britain must increase exports by more than £100 billion just to sustain growth and jobs. How can that happen if our export markets are failing to grow?

Does the right hon. Gentleman recognise that the global economy on which we are now even more reliant is fragile? That is why this G20 was so important. The most recent figures show that growth in our largest export market, Europe, has halved and that the US is still facing high unemployment and slow growth. Does he acknowledge that with growing disagreements between major economies about currencies and trade restrictions, co-ordinated action through the G20 is more important than ever? Does he recognise that this G20 was a missed opportunity?

No one expected the problems to be solved overnight, but it is a problem that the summit provided no co-ordinated action to support jobs and growth worldwide, little progress on reaching agreement on currencies, particularly between China and the US, little assurance by way of anything practical to prevent a resurgence of protectionism, and no concrete action to restart the Doha round of trade negotiations.

This was the fifth G20 summit since the global financial crisis hit in 2008. During that time, the UK provided leadership for co-ordinated global action. Why did the Prime Minister fail to offer that leadership in the run-up to and at Seoul at such a crucial time for jobs in this country and for the global economy? The question that everyone is left asking is, what was his strategy? What was he aiming to achieve? Did he have any proposals for jobs and growth? What were they?

No one expected that the summit would be straightforward, but the problem is that no one even knew what the Prime Minister was trying to do. Tonight he will say in a speech that Britain is

“at the centre of all the big discussions. Producing the ideas.”

So what were his ideas for the G20 and what did he say in those big discussions? Is it not the case that because he has not taken action on jobs and growth in Britain, he cannot lead in the debate about jobs and growth internationally? Is it not the truth that because he refuses to recognise that the economic crisis was global, he cannot engage with international efforts to tackle it? Britain needed to send a statesman to that summit, but all we sent was a spectator. By watching from the sidelines of the G20, the Prime Minister has let Britain down.

Oh dear. First of all, it is lovely to see the right hon. and learned Lady back.

On the Chandlers, I very much agree with what the right hon. and learned Lady said. I spoke to Paul Chandler this morning. It is hard to imagine what that family has been through, and it is great that they are now safely in Kenya and are soon to fly home. I am sure the whole House will want to wish them well.

Let me try to answer all the right hon. and learned Lady’s points. On development, which is something that Britain very much puts on the agenda at such meetings—I spoke up very firmly about the pledges that we had made—she is right in one sense. We talk about global imbalances. There is a huge imbalance between the rich world and the poor world, and if we can get people in the poorest parts of the world to join the world economy, we will all benefit.

On climate change, the key point is we are prepared to sign up to another Kyoto-style period, but we have got to have global agreement where others agree to sign agreements as well. That is the point that we will continue to push. The right hon. and learned Lady raised a point about the introduction of the Basel III accords and how we balance wanting safety in our financial institutions with an increase in bank lending. That is one of the reasons why Basel III is phased in the way it comes in.

The right hon. and learned Lady raised the issue of the deficit and made the usual accusation that, in Britain, we are acting too fast in dealing with it. I just think that Labour is completely wrong about this. The alternative to dealing with the deficit would not be some beautiful period of uninterrupted growth; it would involve putting ourselves in the same category as countries in which interest rates are rising and confidence is falling. That is the alternative, and that is where she and her party would have landed us.

The right hon. and learned Lady said that there were great disagreements over currencies, but if she looks at the language of the communiqué—perhaps next time she will read it before writing her script—she will see a lot of agreement on not having competitive devaluations over imbalances. She is right to say that this issue is not going to be solved overnight; I said that in my statement. We are asking different countries to do different things in order to achieve a maximum global outcome. That is tough and difficult, but there was progress at the summit. I also heard direct from the Chinese about their plans to rebalance their own economies.

The right hon. and learned Lady asked what we had brought to the table. The idea of a pan-African trade deal was not on the G20 agenda; we put it on the G20 agenda. The idea of pushing further ahead on Doha by making the deal bigger was a French, German and British initiative that we did at Doha and that pushed the Americans and others to go further. On the issue of imbalances, the key compromise to get the Americans and the Chinese together was again something that was pushed very much by the Germans and the British.

I think that the right hon. and learned Lady is completely wrong about this. If Labour had been at this G20, it would have been completely isolated over the issue of the deficit. Everyone else in the room was signing a communiqué on how we have to take early action on deficits. That is the consensus, but Labour is completely outside the consensus. One group of people represented at the meeting was the International Monetary Fund, and I suspect that if she had been there, she would have been locked in a room with them.

Did the G20 discuss the situation of the Irish banks which, because of the potential knock-on effects, could pose as great a threat to the world economy as did Lehman Brothers, AIG and Goldman Sachs in September 2008? If so, what view did the Prime Minister’s colleagues take of Chancellor Merkel’s stated determination not to allow her taxpayers to bail out the gamblers who made great fortunes by taking the risks that have created the present crisis, even if that led to the default of national banks?

My hon. Friend asks an important question. The issue of Ireland was not specifically discussed at the G20. A statement was issued by a number of European Finance Ministers, including my right hon. Friend the Chancellor of the Exchequer, about the mechanism that will be put in place in the eurozone, because there was a concern that what had been thought about was having a negative impact on Ireland. Obviously, eurozone and European Prime Ministers and Finance Ministers at these gatherings always meet and discuss the health of the European economy and the eurozone. I do not want to speculate about another country’s finances. I recognise that the Irish are taking very difficult action to try to get their own fiscal situation under control. Like the United Kingdom, they obviously have very large banks that have got themselves into difficulty and that have to be managed out of the process. We very much hope that all that will take place.

I welcome the Prime Minister’s warm words on the release of Aung San Suu Kyi, but, a little to the north and east, in China, a fellow Nobel peace laureate, Liu Xiaobo, is rotting in a communist prison. Why did not the Prime Minister have the guts to mention his name and call for his release in public?

What I did, which was the right thing to do, was to have a very frank exchange about human rights with the Chinese in the meetings that we had, and I can tell the right hon. Gentleman that nothing and no one was off the agenda.

May I associate myself and colleagues with the warm words about Aung San Suu Kyi and congratulate the Prime Minister on his mission to China?

I have read the communiqué, which contains an undertaking to ensure that we have a

“resilient financial system by reining in the past excesses of the financial sector and better serving the needs of our economies.”

What does that mean in practice for ending in the G20 excessive bank profits and bonuses and excessive use of tax havens?

There is very strong agreement that we need to deal with the issue of tax havens. My right hon. Friend the Chancellor made an announcement about that while he was in Seoul. We can see real progress in the G20 on the nuts and bolts of regulation, particularly of levels of capital through the Basel accords, but also progress covering the issues that the hon. Gentleman mentions. National steps should also be taken, and I know that he very much supports the bank levy that we have put in place, which is raising serious money. In a way, it is saying to the banks that it is right that they should now be making a contribution as we deal with our fiscal deficit.

I, too, very much welcome the great news from Burma.

Industry and manufacturing remain at the heart of the Welsh economy. With the pound having weakened against a basket of currencies—it is down 25% since 2007—we should really be looking for an export-driven recovery. What has the Prime Minister been able to secure, through the recent trade mission and the G20 talks, that will aid that recovery and hopefully help Welsh and English manufacturing and industry?

A series of deals were agreed while my ministerial colleagues and I were in China, including a very large deal involving Rolls-Royce. It is also worth remembering that the trade mission that President Sarkozy spoke of included a very large Airbus deal, which I know has very positive effects for Britain and indeed Wales.

The hon. Gentleman is right to say that our export performance needs to improve. Obviously we have seen a change in the level of our currency, but I am focusing on ensuring that all the things that UK Trade Investment and the Government can do to help our exporters are in place. I will go on leading missions to fast-growing parts of the world. So far, in six months, I have been to Turkey, a very fast-growing economy that some people call “Europe’s BRIC”—a reference to Brazil, Russia, India and China. I have been in the largest trade delegation ever taken to India, and now in the largest one to China. I am going to keep up with that. I think it is important that we get behind our exporters and help them to create jobs in our countries.

Can my right hon. Friend confirm that, should there be a rescue operation for any eurozone member under the European financial stability pact, the only reason why there is a danger that Britain may be required to contribute under qualified majority voting is that the last Labour Chancellor of the Exchequer shamefully signed up to that requirement after the election but before the coalition Government were formed?

My right hon. Friend is entirely right. The European financial stability mechanism, which was established just before this Government came to office, was established on the basis of qualified majority voting. It allows money to be spent with a budget that lies between the European budget and the own resources ceiling is, and yes, that money could be distributed in the way that he says.

That is not to be confused with the European financial stabilisation facility, which does not involve the UK. I also point out to my right hon. Friend that the treaty amendment that the European countries are looking at will not affect Britain’s potential contributions. However, he is right that the financial stability mechanism was established before this Government came to power and very much against our advice.

Order. I point out that Members who came into the Chamber after the Prime Minister started his statement should not expect to be called. That is the convention, and we are sticking to it.

Did the Prime Minister have an opportunity to discuss with President Obama and others the situation in Yemen? After the bomb was discovered at East Midlands airport, the Prime Minister rang President Ali Abdullah Saleh, and he knows that the situation is absolutely desperate there. What help can we give countries such as Yemen?

The right hon. Gentleman makes an extremely good point. I did discuss that with President Obama. What is happening in Yemen should be absolutely at the top of the list, because of the al-Qaeda threat that is coming out of that part of the Arabian peninsula. President Obama and I agreed that we have to take a mixture of steps. One of the problems is encouraging President Saleh to see that the al-Qaeda threat is a threat to his own country and needs to be top of the list of what he wants to address. Obviously Yemen also faces problems with rebels in the south and Houthi rebels in the north, but we have to convince it that the al-Qaeda threat is a threat to all of us and to the security of the world, and that is what we will do through aid, through the Friends of Yemen process and through every other means at our disposal.

The deputy leader of the Labour party asked my right hon. Friend what his agenda is. Is his agenda that when he returns in triumph from his 10th or 20th G20 conference, he can tell the House that he has turned round our economy by creating a small-government, flat, low-tax and privatised economy?

My hon. Friend gives me an extremely good script. My agenda at such gatherings is to stand up for Britain’s national interests. Above all, as a trading nation, that is about keeping the markets of the world open, and making sure that British business can create wealth and jobs around the world. That is the agenda we should have. When we are trying to get our economy growing at home, it is very important that we focus on those things that most help us back here in Britain.

I listened carefully to what the Prime Minister had to say about competitive devaluation and rebalancing the Chinese economy. Will he say precisely what the Chinese agreed to do about the renminbi, and what he thinks is the most desirable action?

There are two points, the first of which is on what is in the communiqué. Everybody signed up to avoiding competitive devaluations and moving towards market-led exchange rate systems. I accept that those are words, but they are positive. The fact is that China and America are discussing their differences and issues in a multilateral agenda. The second point is that it is in the interests of China itself, and indeed in its five-year plan, to see a growth of domestic demand as the next driver of its economy. That is good news for Britain, America and the deficit countries, but it is also in China’s own national interest. We should try to flag that up whenever we talk to the Chinese about that.

Will my right hon. Friend accept my enthusiastic applause for his principle of free trade, the growth of small businesses and all that goes with that in international affairs? Will he explain how he will achieve that without achieving competitiveness in the European Union—the imperative competitiveness to which he has referred in the past—and deregulation, including the repatriation of social and employment legislation from the EU to the UK?

I thank my hon. Friend for his question. My point—this is perhaps the point of difference between us—is that although I think the EU has taken too many powers and become too federal, as it were, I believe that at the moment quite a lot of like-minded EU Governments are on the centre and centre right of politics. They want deregulation, competitive markets and an agenda that means that we can reform the structures of our economies and get growth. That is true of the Germans, the Dutch, the Swedes, the Danes and many others. They are natural allies for us and we should push forward the deregulation agenda in Europe. I intend to do so.

Is the Prime Minister confident that there will be no currency war? If there is a currency war, how will it affect Britain?

Obviously, we will not benefit from pressures between America and China over trade and currencies. They are the No. 1 and No. 2 economies in the world, and it is in our interests to anchor them in the G20 where we can discuss those things rationally, rather than see the eruption of trade and currency wars. No doubt there are big protectionist pressures in the world today, but they are very much against our interests, because we export more per head of population than most other countries in the world. We must therefore keep those markets open. That is why we must work so hard through forums such as the G20 to make sure that that happens.

I hope the Prime Minister had the opportunity to visit the Great Wall—he knows from our previous discussions how important ancient boundaries are to me.

In answering other hon. Members’ questions on the currency issue, the Prime Minister has repeatedly referred to positive progress between China and America. Will he take every opportunity to ensure that the voice of this Government is felt keenly in those discussions?

I thank my hon. Friend for his question. I was worried for one minute that he was about to build the Great Wall of China along the Tamar river. For those of us who still enjoy holidaying in Cornwall, that would be a bad step—we might not be allowed in!

We should not overstate our influence, but nor should we understate it. Britain is an economy and country that is listened to in such forums. We are always in the vanguard of arguing for free trade and against protectionism, and we try to bring countries together, as we did with the Germans, to try to help to broker agreement on imbalances, and to make sure that the G20 can move forward.

I understand the Prime Minister’s point on protectionism and the imbalance. There has been good news about exports and we need to keep that market open, but how do we protect British industry from imports from countries such as China that have very low-wage economies?

I think that would be a mistake; I do not believe that protectionism works. If we took the view in this country that we should raise some trade barriers to Chinese goods, we would just be putting off the day when we have to be more competitive, work out how to get up the value chain and produce goods that the Chinese want to buy. I am more optimistic; I think that when we see the Chinese economy develop and we see a growing Chinese middle class, we will find that they will want the goods, brands and services that we produce in this country. I think that we should be more confident, recognising that free trade has been a great growth motor for the world economy and is not something we should fear.

Although nobody in the British Government is suggesting bailing out the Irish economy, is it not the case that 40% of UK trade takes place within the eurozone and that a stable Ireland and a stable eurozone is very much in the UK national interest?

My hon. Friend makes an extremely good point. Not only that, but Ireland is an enormously important trading partner for Britain. It is a fact that we export more to Ireland than to Brazil, Russia, India and China combined. That is a rebuke to us, because we have to do better with those other countries, but Ireland is an extremely important trading partner, and stability and success in the Irish economy is very much in Britain’s interests.

I thank the Prime Minister for making representations to free Aung San Suu Kyi. He said that nothing was off the agenda. Will he say whether he discussed Iran in general and, specifically, the case of Sakineh Ashtiani?

I did have discussions about Iran, particularly with the Chinese, but also with other world leaders at the G20. The point we are continually pushing is the importance of maintaining the sanction regime and making sure it holds, because it is potentially having a huge impact on the Iranian regime and we should keep it up. I did not raise the specific case that the hon. Lady mentions, but I have raised it in other ways with others.

Does my right hon. Friend agree that as part of our plan to rebuild the broken economy left to us by the Labour party, supporting science and technology-based companies, of all sizes, is vital? What practical measures are in place following the confirmation of the free trade agreements that he got at the summit?

First, we are not making reductions in the science budget. It is being frozen in cash terms, and that is absolutely right. Secondly, the next group of Ministers to go to China will include my right hon. Friend the Minister for Universities and Science. He will go out there for specific talks, because the Chinese want to examine the specific areas where they can link up with us. In terms of scientific research, Britain already does more partnering with Chinese scientists than many other countries.

Two years ago, the then British Prime Minister galvanised world leaders to prevent a worldwide recession from turning into a worldwide slump. Because of this Prime Minister’s cuts in public spending, companies in my constituency will rely more on the export market and his policies will throw at least 1 million people out of a job. Can he explain to the House how his being a spectator at this year’s G20 summit will assist the companies in my constituency to secure the foreign orders that they desperately need?

If the hon. Gentleman wants to help businesses in his constituency, he should stop talking the British economy down. Whatever he says about the previous Prime Minister, who is not here today to join in the discussions, the fact is that the right hon. Gentleman left Britain with the biggest budget deficit in the G20. When we looked at the countries around that table, which included those such as Argentina, we found that we had a bigger budget deficit than they did. That is why we are having to deal with the deficit—the mess that the previous Prime Minister left behind.

My constituents in Dover and Deal will find the Prime Minister’s focus on jobs, money, the national interest and sorting out our house refreshing. Will he tell the House more about how his work with India and China and trade missions there has helped our economy? Did it strengthen us at the G20?

Some people say that it is quite old-fashioned to pile an aeroplane full of business leaders and fly them off to India, China and the rest of it. I do not agree. It is important to try to bash down the door in order to secure trade in different countries, and the enthusiasm and energy that you show does actually have an impact, because you want to make sure that Indian universities are looking to link with British universities and Indian firms are looking to link with British firms. So, yes, making a bit of noise and taking a good team of business leaders over does make a difference, and I think that we will see trade, jobs and two-way investment as a result.

One of the inequalities in the world is the tax haven status that many territories enjoy. It has a profoundly deleterious effect on the economies of some of the poorest countries in the world, so does the Prime Minister believe that Cayman should maintain its tax haven status, or will he take action to prevent it from retaining that status?

We do work hard to try to deal with the issue of tax havens, because every pound not paid in tax to the UK is a pound that we have to raise from somewhere else, and we have been working hard on that agenda. We have just done a very good agreement with Switzerland, and that will result in a huge amount of extra tax revenue being collected.

May I congratulate the Prime Minister on the billions of pounds’ worth of deals done on his recent trip? Will he pay tribute to UK Trade & Investment’s role and please ensure that it keeps replicating that improved performance for British business and, particularly, Yorkshire business over the coming months?

My hon. Friend is right to speak up for UKTI. It does an incredibly important job linking British businesses with businesses the world over. One of the things that I have found in the past is that, while other Ministers visiting this country have always had a very clear list of the bilateral deals on which they have wanted to see progress and action, we in this country have not been as good at that. It is about time that we were, and I am making sure that that happens.

The Chancellor has been promising international progress on the financial activities tax since way before the summer. Why did the Prime Minister fail to make more progress on that issue at the G20?

That issue is being discussed, but it is a difficult issue on which to get agreement from all G20, or even all EU, members. That is one reason we pushed ahead with the bank levy. The previous Government took the view that a bank levy could not be introduced until everyone agreed, but we would not have that revenue, and we would have to find it from somewhere else, if we had not taken the right, unilateral and brave action to put in place a bank levy.

Will the Prime Minister join me in welcoming to Westminster today the large delegation of Indian chief executives, many of whom he met on his trip to India in July, who are here to discuss ways of deepening trade and investment ties between the UK and India?

There is a very impressive team of Indian CEOs, some of whom are here to discuss climate change, green-tech jobs and how we can exchange technology and investment between our economies. That is an incredibly promising agenda. We have a very good green-tech sector and a lot of expertise in technology, and many other countries—India, in particular, perhaps—would like to see that technology brought to bear in their own countries, which, again, means jobs for them, jobs for us.

Keeping the economies of low-income countries open is one thing, but growth is quite another. What agreements was the Prime Minister able to make on infrastructure investment for low-income countries?

One of the things that we are able to do, by having an aid budget that is rapidly growing and meeting our 0.7% target, is to make infrastructure investments in developing countries, and we will go on doing that. It gives Britain some leverage in the world, because you are able to look around that table and ask others to step up to the mark and meet the promises that they have made.

Does my right hon. Friend think that this country might export more to China if more of us spoke Chinese? If so, does he think that the matter should be looked at in the education system?

I do. My hon. Friend is entirely right, and that is why the Education Secretary, who was on such robust form earlier, was in China with me, signing an agreement with the Chinese Government on the teaching of English in China, but also the teaching of Mandarin in our schools. It is extremely—[Interruption.] The Education Secretary speaks perfect English; I do not know what hon. Members are talking about. However, I think that the agreement is a very important step forward.

For much of the past decade, Ireland was held up by Conservative Members as an example of the direction in which we should have been taking our economy. Now, because Ireland has followed a strategy that largely involves having the same medicine that the Prime Minister is recommending for this country, it is seeing markets questioning its economy, interest rates rising and confidence falling. What lessons has the Prime Minister learned from the situation in Ireland?

I think that the biggest lesson is that the Irish followed one key new Labour policy, which was to join the euro. Fortunately, new Labour did not have the courage and bravery to follow through its own manifesto and listened very carefully to my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), who fought a very strong campaign to keep us out of the euro.

I welcome the language in the communiqué on imbalances and the recognition that more needs to be done. Given the clear language in the communiqué and the support for dealing with deficits, can the Prime Minister think of any credible group that now opposes action on the deficit?

It is difficult to find a group that is against dealing with deficits. I think that even Cuba has now recognised that we need to take action—and that is the point. The G20 is united in the fact that we need to deal quickly with large and excessive deficits. That was the conversation around the table, and that is what is in the communiqué. There is only one group of people I can think of who would have been in the deficit denial corner: the Labour party.

On aid, does my right hon. Friend agree that, as well as the altruistic aim, there is also self-interest, both in reducing the number of lawless places in the world and increasing gross world product, which benefits everybody? Does he agree that in these difficult times the case must be made repeatedly to the public that such investments are perfectly rational, when well-targeted and, crucially, when the G20 is acting in concert?

My hon. Friend is right. We have to make this argument, because there is no doubt that a lot of people in our country look at a growing aid budget and think that that is money not well spent; they think that that money should be spent elsewhere. We have to make the argument that this is not just a moral argument about relieving poverty in the poorest parts of the world; it is also about avoiding conflict and about investing money upstream so that we do not end up with the Afghanistans and other broken countries. When we look at places such as Yemen and Somalia, it is quite clear that we need to have active aid programmes to try to help stitch those countries back together before we reach more serious problems.

The House will have admired the Prime Minister’s evasive action on the issue of Ireland. He must be aware that it was the very strong view of the previous Government that we should not go into the euro and we were successful in that respect. What lessons, apart from that, can he now draw from the Irish situation? The Irish have been exemplary in every respect in pursuing the course that he has embarked on, and they have ended up in the mess they are in at the moment.

I do not want to make life difficult for the Irish at a time when they are trying to take difficult decisions about their own economy. However, they had a consumer boom, a property boom and badly regulated banks—some of the mistakes made by the Government of whom the hon. Gentleman was briefly a member—and they added to that the issue of euro membership. I always think that the great lesson from the exchange rate mechanism is that the euro is the exchange rate mechanism without an exit, and that is the problem.