By Peter Mandelson
UPDATE 4.30 pm
My post has been extended to include the full remarks that I have just made to the Council for Foreign Relations on the current economic situation and how we deal with it:
Inevitably, handling the banking crisis is overlain with politics and that is inevitable.
But just as we are facing the re-invention of economic orthodoxy, it cannot be business as usual in politics either.
There are no manuals, no blueprints, no precedents to tell us what to do. Britain, deservedly, got credit for its first moves to re-capitalise the banks last October, and further moves to deal with banks’ toxic assets in January, as well as the national economic stimulus that others are following.
But this is tough politics, identically as I am seeing in the US as in Britain and elsewhere in Europe.
- While governments need to take time to plan carefully, they are accused of dragging their feet.
- While, inevitably, measures cannot take effect immediately, there is a demand for instant delivery.
- While everyone is impatient to know the exact scale of the banks’ asset write down, this cannot be established – and priced – as a simple exercise.
- While everyone wants to know the full truth and scale of the crisis, no one wants to be blamed for precipitating a further fall in confidence, and share prices.
The political dilemma for us is that we need high level meetings and action, which generate big expectations which, in turn, trigger disappointment and market reaction when immediate results are not produced.
In government, we do not complain of this, but it needs handling.
The fact is, recovery is going to be a complex process and while this is difficult for our 24/7 media, and gives plenty of opportunity for our political opponents to exploit, there is no value in trying to create frenzy around these issues everyday.
We are going to find a way through, at home and internationally. It will take time. We cannot schedule the recovery, but it will start.
In Britain, as in the US, we are in an uncomfortable place in this unfolding drama, post “first-mover” and pre “signs of change.”
As nations, we must keep a steady nerve and cool judgement, constantly refining our policies as necessary. Governments must neither ignore the public’s anger and impatience, for example on bank bonuses, nor be pushed into hurried judgements because we fear accusations of indecision.
What we do has got to be right, even if it means more time before we are seen to deliver. This is politically difficult but economically necessary, and we have no choice but to get on with the work and speed the recovery as fast as we can.