THE contagion that sent stock markets plunging around the world last week is more than a Eurozone financial concern.
US Treasury Secretary Tim Geithner demonstrates the level of anxiety in the US through his less than subtle urging for ‘decisive action’, while the speculation regarding a Chinese bail-out is associated with the growing level of dependence there is on western economic progress for continuing growth in the world’s fastest growing economy.
There is a degree of irony in this apparent clash of economic ideologies. The US, the IMF and the Conservative side of our coalition government are the strongest proponents of free markets.
Yet the financial shifts in power, the instant devaluing of whole national economies and subsequent impacts on their ability to borrow and run those same economies, is entirely a result of ‘free’ global financial markets.
The irony being that the US, the IMF and the UK are urging the Eurozone countries to act collectively to counter the dynamics of those market forces. Markets are good, it seems, except when they’re bad.
The regional economy we all depend upon for our livelihoods and for some quality of life is to a large degree a bystander in this international turmoil, but in so many more ways is a direct victim of the global politics at play. The Eurozone crisis is now at the point of recession. Last week the European Purchasing Managers Index indicated for the first time in a little over two years that there was negative growth forecast in Europe – this affects us because the North East is an exporting region; and it is the Eurozone that is the major export destination.
Secondly, it is the free market orthodoxy that suggests that the only way to achieve global financial and economic credibility is to significantly and rapidly reduce public spending – again this is a policy dynamic that impacts more dramatically here than anywhere else in the UK or most European regions.
This scenario leaves the North East somewhat between a rock and a hard place. The pressure to reduce the public sector footprint in the region is high. Meanwhile, the likelihood of those public sector jobs being replaced by an emergent dynamic private sector diminish in the chaos of the global financial markets.
The reality for the North East is that we are now entering a long period of low rates of employment and high levels of unemployment. It is important to acknowledge that and to introduce policies that respond to that.
:: Kevin Rowan, Regional Secretary, Northern TUC
