PEACE and prosperity, fuelled by free trade and open markets: that is what the world needs. In the main, that is what it is getting, to a degree unprecedented in modern history and fuelled by modern communications. So it is terribly disappointing that the Argentine government seems so desperate to inflame tensions between itself and the UK, using yesterday’s 30th anniversary of the Falklands conflict as an excuse for much bellicose nonsense. One could understand how a renegade, deranged regime such as Iran’s despotic administration might like to create trouble in this way – and help incite rioting outside the UK embassy – but Argentina? Why? And why is it threatening trade sanctions on the UK? As the great 19th century French economist Frédéric Bastiat pointed out, down that road lies disaster. “When goods do not cross borders, soldiers will”, he wrote. Yet war is the last thing anybody needs – and fortunately, none is likely.
Argentina ought to be doing what every other emerging market is trying to achieve and embrace peaceful globalisation. It has no legitimate claim to the Falklands, which it only ever controlled for a few months in the 1830s; its sabre-rattling is distasteful and unacceptable. Geographical proximity is no argument for political unification – New Zealand is not part of Australia, and Ireland long since became independent of the UK. It is also profoundly undemocratic: the Falkland islanders want to remain British, and their wishes should be respected. There are no discussions to be had, no compromises to be reached.
Bizarrely, the EU is still handing foreign aid to Argentina, funded by UK taxpayers to the tune of £7m, even though Buenos Aires is threatening an EU member state. Britain is also a top shareholder in the World Bank’s International Bank for Reconstruction and Development, which is owed billions by Argentina and which is still signing off new projects to help the South American state. Given that Argentina is calling for UK firms to be boycotted and is threatening to sue banks and oil companies, it is high time that the UK government rediscovered some gumption and stopped financing those that constantly attack British interests. Demagogic politicians, such as Argentina’s Cristina Fernández de Kirchner, who constantly threaten their neighbours, should be shunned by their peers. It is no way to behave in a civilised world.
OECD: 0 – UK: 3
WHEN the OECD recently warned the UK was already in recession, and that the contraction in the final quarter of last year would be followed by another in the first three months of this year, many commentators took the predictions at face value. This paper was much more sceptical. Nobody knows what our official number-crunchers will make of the first quarter – a negative number remains a possibility. But for the time being the OECD seems to have exaggerated Britain’s problems.
As Andrew Sentance, the former MPC member put it, the latest data suggests a score of OECD: 0 - UK economy: 3. There have been three important surveys in recent days – and all three suggest that the economy is growing: the CBI/PwC financial services survey, Deloitte’s poll of chief financial officers and yesterday’s purchasing managers index for manufacturing, which rose from 51.6 in February to 52.1 – its highest level for ten months and well above the key 50 mark separating contraction from expansion. It’s feeble growth – but still much better than a double-dip.
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