As the world's major stock markets fell through the floor yesterday afternoon, the Chancellor delivered a statement to MPs about the measures he was taking to ensure stability in the banking system. It was meant as a message of reassurance. But this was not the sort of statement you expected to hear from a British Chancellor, any British Chancellor.
By the very act of making it, Alistair Darling seemed to raise the spectre of those queues this time last year outside Northern Rock. Small matter that he had some good news to announce: Northern Rock had already paid back more than half of what the taxpayers had generously advanced. The frequency with which he employed the word "stability" only made things worse. George Osborne, for the Opposition, asked why the Government was not doing more.
This is one of the strangest features of this crisis. Conventional political categories and expectations have been turned on their head. President Bush, who came to office as a evangelically tax-cutting free marketer, has approved some of the biggest state interventions in the US since the Second World War and been condemned by once like-minded Republicans for embracing socialism. Something similar happened to Mr Darling yesterday.
When he confirmed that bank deposits would be guaranteed up to £50,000 from today (but no further); when he listed the measures taken by the Bank of England to inject liquidity into the market – a parade of what would once have been regarded as stratospheric sums of money – and when he announced a review of the whole system of banking regulation, the response from the benches opposite was to chide him for not doing enough. Mr Osborne also queried whether the response was being coordinated sufficiently closely with the European Union and whether Britain should not be following the Europeans' proposed changes to the accounting system.
For a Conservative Party that has continually demanded less, rather than more Europe, this seemed a bit rich. But if you disregarded its provenance, the question was just. The government of Gordon Brown and Alistair Darling has hardly exhibited the most Europhile tendencies up to this point either, least of all on matters economic. Yet the Chancellor made great play of how he regretted that Ireland had announced its unlimited guarantee on bank deposits without consulting its EU partners first, and how Germany had almost done the same, except Chancellor Merkel's assurance to German depositors had been political, rather than judicial.
Now that it has arrived in Europe, the financial crisis has indeed exposed a key weakness of the eurozone, as a group of countries bound by a single central bank, but without either a single Treasury or revenue-raising authority. Were borrowing constraints on national governments to be lifted, the glue in the system could be fatally diluted. If the euro is to be as ephemeral as some of its critics believe, these are the sort of circumstances that could spell its end. Political will, on the other hand, could strengthen it.
Today's meeting of European finance ministers will be a better test of Britain's readiness for concerted EU action than exchanges, however cordial, in the Commons. Tellingly, though, Mr Darling's statement did nothing to restore traders' confidence. The FTSE 100 closed almost eight points down, about average for a truly appalling day on the European markets. If we could pretend that we were not all in this together before, we certainly cannot do so now.Reuse content