My Lords, France is an important partner for the United Kingdom and our dialogue is wide-ranging. The Government look forward to continuing their close co-operation with new French Government, including on foreign and defence policy, energy and immigration. My right honourable friend the Prime Minister had a warm first meeting with President Hollande in Washington. He has invited him to visit London after the French parliamentary elections this month. Other Ministers across government have also met or contacted their new counterparts.
I thank my noble friend for that Answer. With the French Government securing ever greater support for their EU-wide growth agenda, particularly now that they are armed with decisive strength in the French Parliament, including when next Sunday’s results are taken into account, does he agree that it would be very fitting for HMG to join that European-wide effort, because there is now an increasingly urgent need to offset the threat of an international slump?
Yes, we all have to join in the efforts to bring about recovery and end recession in our region and globally. These are matters that we discuss closely with the French. We agree with some of the ideas behind the various projects which Monsieur Hollande has put forward—what has been called the “Hollande vision”—but disagree with others. We have a perfectly amicable difference of view on, for instance, a financial transaction tax, which we believe would be damaging and would, according to the European Commission’s own analysis, take €200 billion out of the European economy. However, on other ideas of Monsieur Hollande—project bonds for infrastructure expansion, for instance—we concur. We reject the idea that there are two alternative strategies that are exclusive: austerity or growth. The answer is that sound budgetary discipline and growth all go together in a sensible and balanced programme.
My Lords, do I understand the Minister to be saying that Her Majesty’s Government do not intend to tell off President Hollande for pursuing his foolhardy expansionary policies and not following our contractionary policies with all the enormous benefits of rising unemployment?
The noble Lord should not understand that, because I find his question rather hard to understand as well. The polarity of argument that he poses simply does not exist. The aim of Governments throughout Europe and throughout the global system is to restore expansion. We welcome the ideas of the French and of Monsieur Hollande where we think they would go in that direction, just as I think France and all responsible countries recognise that there has to be tight budgetary discipline as well, otherwise the efforts to expand if they immediately jack up interest rates would simply cancel out the policy. There is a matter of balance, and the noble Lord is better than most at understanding the need for balance in economics rather than one side or the other.
My Lords, does my noble friend agree that while a pro-growth pact in Europe is welcome, it seems to be a bit of challenge to reduce a budget deficit supposedly exceeding even Italy’s by 2017, while magicking up 3.5% growth next year and massively cutting unemployment? It is a very ambitious project. If it is likely to succeed, will we listen very carefully to the ideas that bring it about, particularly after next Sunday when we might see a few more details of these plans?
These are challenging demands, and they are obviously creating great strains and tensions in the countries affected. In a way, my noble friend has asked me to comment not so much on Monsieur Hollande’s wish to see expansion, which we all share, as on the German wish to stick very rigidly to certain austere budget disciplines. Somewhere between those two, and perhaps in talks between Monsieur Hollande and Chancellor Angela Merkel, there will emerge a sensible balance. We hope that there will and we shall certainly contribute to anything that achieves that.
My Lords, will the Minister accept a mild rebuke from me on the pronunciation of the names of French Presidents? I declare an interest. It seems a failing of successive Governments to get the names of French Presidents properly pronounced. The previous President was inevitably and almost always referred to as Mr Sarkozy as if it was meant to rhyme with tea cosy, when in fact it does not; and President Hollande is President Hollande and not President Hollander.
Does my noble friend accept that the Question goes generally to our relations with France, and in this connection to the very important issue of defence co-operation with France? I hope that we can see the continuation of the co-operation envisaged under the previous President.
Yes, that is certainly the intention. Those matters have been discussed both between the Prime Minister and Monsieur Hollande and between my right honourable friend the Foreign Secretary and Laurent Fabius, the new French Foreign Secretary. Obviously a question was raised by our decision to go for the JSF variant rather than the original pattern under the strategic defence review. That has been discussed. Any suggestion of misunderstanding has been removed and both sides fully intend to co-operate very closely in the future on all defence matters.
My Lords, in an earlier reply, the Minister talked about the policies for constraint in public expenditure as well as those for growth. Can he give us a quick summary of the steps that Her Majesty’s Government are taking to promote growth at the moment?
Not in the time allowed, no. There is a perfectly sensible proposition that, although the growth of public expenditure has been restrained—in some areas, not actually cut at all—this is a necessary part of getting a balanced, suitably relaxed monetary policy in as far as it can be relaxed, paving the way for further expenditure on infrastructure, of which some has been authorised. One hopes that in future there will be more. This is the rebalancing of the economy that all sensible people are aiming for.
The Minister will recall with a certain amount of embarrassment that we on this side of the House welcomed candidate Hollande to London during his election campaign.
Going back to defence co-operation, the Minister well knows that we and France are the serious players in defence within the European Union. We both face economic difficulties. Has there been any signal yet from the new French Government that they wish not only to continue our substantial defence co-operation but even to enhance it?
On the second point, there has been a signal that they wish to enhance co-operation in a number of areas. On the question of welcoming opposition candidates to London, my right honourable friend is not physically in a position to be able to meet every opposition candidate. Other leaders such as Chancellor Merkel and Mr Monti in Italy did not meet Monsieur Hollande before he became President, but that was not taken as a snub or an offence; it was a perfectly normal procedure. Now they have met and have got on very well.
There is emerging an understanding, not least from the contribution of the new French President but also from discussions with Germany—and, indeed, from the latest moves in relation to the banking union and the proposals for bank recapitalisation for Spain—that some balance has to be struck. Whether that will mean some easing of the conditions for Greece or not, I do not know. These matters are now being discussed between the eurozone countries. There is a sensible way forward and obviously my noble friend makes the perfectly valid point that if the cure is so violent that it kills the patient, it is not much of a cure.