Smith warns of spiral into slump

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Indy Politics
GROWTH must be put back on the agenda of the Group of Seven industrial nations, John Smith said yesterday, warning that 'trade wars and recession threaten a downward spiral into a global slump and political disintegration', writes Nicholas Timmins.

The Labour leader was speaking in Athens after being elected chair of the Socialist International's economic policy committee which is to draw up a framework for economic co-operation.

Mr Smith said the threat of recession and the reality of rising unemployment in Europe was a 'profoundly worrying and dangerous trend' because if interdependence was seen as a source of economic weakness 'then the clamour for purely 'national' solutions, however misguided, will grow'.

The reality was that 'these days no country can go it alone' if economic prosperity and environmental protection is to be achieved.

A Marshall-plan approach to eastern Europe was needed, he said, challenging the International Monetary Fund's approach of proposing 'severe reductions in social expenditure and austerity measures applied almost regardless of the political consequences'.

The failure to achieve a concerted response to the debt crisis in Latin America and Africa had been not just a human tragedy for millions but a drag on the world economy.