British Prime Minister David Cameron Issues Grim Economic Warning In Speech To Parliament In Ottawa

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OTTAWA - British Prime Minister David Cameron joined Stephen Harper on Thursday in issuing a grim warning of a second recession if world leaders do not take bold corrective action.

"We're not quite staring down the barrel, but the pattern is clear," Cameron told a joint session of Parliament.

Cameron, fresh from a speech at the United Nations, lauded Canada's economic record saying this country " in the last few years, has got every major decision right," as Harper looked on in satisfaction.

READ THE COMPLETE TEXT OF CAMERON'S SPEECH

But he said the rest of the world is awash in debt.

"This is not a traditional, cyclical recession, it’s a debt crisis," said the Conservative leader of Britain's coalition government.

"It is not simply a question of using conventional fiscal and monetary levers to stimulate growth until confidence and normal economic activity returns."

SEE PHOTOS OF CAMERON'S VISIT TO CANADA

Cameron made an impassioned plea for countries to work together on freer global trade as one solution to the impasse.

Harper, speaking just before Cameron, told the House that the biggest test facing the G20 is avoiding the "devastating consequences" of a return to a global recession.

READ THE COMPLETE TEXT OF HARPER'S SPEECH

"Without key countries taking systemically appropriate and coordinated economic measures, without resistance to protectionism and acceptance of more flexible exchange rates, without fiscal consolidation, without a commitment by governments to cut rising deficits and reduce what are, in some cases, dangerous levels of national indebtedness, without things such as these, we will not avoid such a recession," Harper said.

The two leaders discussed the situation in Libya, but Harper clearly signalled their talks on the world economy, including the European debt crisis, were paramount.

Harper lauded Cameron's handling of the UK's financial woes, which has included deep cuts to the public service.

He also commended Cameron for "his consequential handling of the difficult fiscal choices confronting the British economy."

"Here in Canada we have followed your progress carefully, and I can safely say that where it matters most, your thinking parallels that of our own government," said Harper.

NDP foreign affairs critic Paul Dewar said he didn't want to see Harper use Cameron's visit to justify cuts to Canada's federal bureaucracy.

Canadians understand the importance of public services, Dewar said before Cameron's arrival.

"I think Mr. Harper shouldn't be using Mr. Cameron as a foil to … do his work. I don't think that would be accountable, responsible. And I think people would see through it."

Earlier Thursday, Harper and Cameron joined the leaders of Australia, Indonesia, Mexico, and Korea in sending an open letter to French President Nicolas Sarkozy, the G20 chairman, calling for strong action at the November Cannes summit to help ensure global economic stability and growth.

Finance Minister Jim Flaherty also warned of a repeat of the October 2008 recession if action is not taken.

Cameron's address to Parliament was his second speech of the day after addressing the United Nations General Assembly in the morning before his side trip to Canada.

It wasn't his first visit. Cameron attended the G20 Summit in Toronto shortly after being elected to head a coalition government in the spring of 2010.

But Tony Blair was the last British PM visit Canada bilaterally in 2001.

David Cameron's Visit To Canada
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THE FOLLOWING IS THE COMPLETE TEXT OF BRITISH PRIME MINISTER DAVID CAMERON'S SPEECH TO PARLIAMENT:

INTRODUCTION

Mr Speaker, Mr Speaker of the Senate, Mr Prime Minister, Hon Members of the Senate and Members of the House of Commons…

Je vous remercie du grand honneur que vous me faites en m’invitant a m’exprimer devant ce parlement historique.

I want to begin, in this place, by paying tribute to Jack Layton and I offer sincere condolences to Olivia and his family. His energy and optimism were above politics, and I know he will be missed by all those who serve here.

One of the things I am finding about this job is that whichever countries I visit, members of the Royal family have got there first.

I think the Duke and Duchess of Cambridge - Will and Kate as you called them here - have set the bar pretty high this time.

But it is a symbol of the importance of the relationship between our two countries…

…and the long-standing affection that our people show towards each other…

…that the young Royal Couple chose Canada as the destination for their first ever overseas official visit…

…and that the people here gave them such a warm reception.

Sadly I won’t be landing a helicopter in a lake, or wearing a Stetson…

…and I’m sure Prime Minister Harper will be disappointed that he won’t be able to challenge me at Rodeo either.

THE CANADIAN CENTURY

As the author Brian Lee Crowley has set out, there is a strong argument that the 21st Century could well be the Canadian Century.

In the last few years, Canada has got every major decision right.

Look at the facts.

Not a single Canadian bank fell or faltered during the global banking crisis.

Canada got to grips with its deficit and was running surpluses and paying down debt before the recession, fixing the roof while the sun was shining.

Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

The way in which you have integrated people from many different backgrounds into a mature democracy is a model from which we can all learn.

And Canada is preparing now for a better future.

Alberta is the jurisdiction with the best educational results of any English speaking jurisdiction in the world.

From Blackberry to Canadarm, the robot arm used on 90 space shuttle missions, yours is a home of innovation and technology.
In fact Blackberry presented Her Majesty the Queen with one of their smart phones when she visited them last year…

…but Her Majesty already had one!

Canada displays moral clarity and political leadership.

Canadian service men and women have made extraordinary sacrifices in the defence of liberty and democracy.

And yet, while some countries do a little and talk a lot, Canada is self-effacing and self-sacrificing in its contribution to the fight for a better world.

So it is a privilege for me to come here today and honour what you have done.

It’s also a great pleasure to be standing here with my colleague and friend, Prime Minister Harper.

I have seen at first hand over the last sixteen months his outstanding leadership…

…not least at my first G8 and G20 summits in Muskoka and Toronto last year.

Then, as now, the focus of much of our efforts was on the two issues that concern our people most: keeping them safe and getting them jobs.

This evening I want to focus my remarks on how we can work together to address some of the issues in the global economy.

But let me first say something about security.

SECURITY

We’ve all suffered from Islamist extremism.

I have just come from the United Nations where I have argued that the events we have seen this year in North Africa and the Middle East…

…offer a massive opportunity to spread peace, prosperity, democracy and vitally security…

…but only if we work together to seize the opportunity to support the Arab people as they seek to fulfil their aspirations for a job, a voice and a stake in their society.

Our two countries have always been prepared to bear the burden and pay the price to make our world safer and defend our whole way of life.

The Peace Tower in this building commemorates the 67,000 Canadian lives lost in the First World War alone.

Britain owes an incredible debt to Canadian armed forces.

And I want to pay tribute to them today.

Through Two World Wars, Canada was there.

At Vimy Ridge, Passchendaele and Ypres, Canada was there.

At the Somme, when our forces together suffered their worst losses in history, Canada was there.

In fact it was after the Somme that Lloyd George said…

…“The Canadians played a part of such distinction that thenceforward they were marked out as shock troops.... whenever the Germans found the Canadian Corps coming into the line they prepared for the worst."

In our darkest hour in World War II, Canadian naval forces helped keep the sea lanes open during the battle of the Atlantic…

…running convoys across the Atlantic week after week, braving mines, submarines and blacked out silent ships…

…all of which proved absolutely fundamental to our ability to survive as an independent country.

And on Juno Beach it was the 3rd Canadian infantry division and the Royal Canadian Navy that achieved such a remarkable triumph on the first day of the Normandy landings…

…and which on D-Day had got further inland than any of the five other invasion forces.

Today Canada is as vital and influential a military partner as it has ever been.

As partners and founder members of NATO, our forces have been proud to serve alongside each other in international operations…

…from Bosnia to Sierra Leone…

…and most recently from Afghanistan to Libya.

In Afghanistan Canadian and British forces have fought alongside each other in the South…

…in the very toughest part of the country, where few other nations would follow.

Today, Canadian personnel are engaged in vital work training the Afghan National Security Forces.

And in Libya, it was a Canadian General, Charles Bouchard, who commanded the NATO operation…

…and brave Canadian pilots who played such a vital role in protecting civilians and helping the Libyan people to liberate themselves.

Mr Speaker, amidst all this there could not be a more fitting tribute to the brilliance of the Canadian forces…

…and our pride at standing side by side with them…

…than the recent renaming of the Maritime Command and Air Command as the Royal Canadian Navy and the Royal Canadian Air Force.

Prime Minister Harper and I will always ensure that Britain and Canada keep our defences strong.

But we also understand that the impact we can have to punch about our weight in the world, and to achieve freedom, democracy and security…

…is not just about military might alone…

…but about diplomacy, aid, culture and the promotion of our values.

Britain is pleased to support the Muskoka Initiative on maternal and child health…

…launched under Prime Minister Harper’s leadership at the G8 last summer.

And we are investing in programmes to save the lives of 50,000 women in pregnancy and childbirth and stop a quarter of a million new born babies dying needlessly.

Of course, at a time when finances are tight, people question whether we should keep our aid commitments.

I say, yes you need to be able to project military power to protect your security and defend your values…

…but it is even better to mend broken states and act to stop problems before they come to our door…

…whether that’s waves of immigration, the spread of diseases…

…or new threats to our national security.

Take Afghanistan.

If we’d put a fraction of our current military spending on Afghanistan into helping Afghanistan develop 15 or 20 years ago …

…just think what we might have been able to avoid over the last decade.

Or take Pakistan.

Let another generation of Pakistani children enter life without a proper education, or the prospect of a job and a head full of extremist propaganda …

…and what are the risks in terms of mass migration, radicalisation and terrorism?

Britain and Canada have never turned away from the world.

So it’s right that we have met our aid commitments…

…and I hope you will continue to join me in working with our international development partners…

…not just for the good of the developing world, but for the safety and security of us all.

ECONOMY

Just as Britain and Canada have worked together for the world’s security so we must now work together on the biggest challenge this year: securing strong and sustainable growth in the global economy.

Now it's important that we are clear about the facts.

We’re not quite staring down the barrel. But the pattern is clear.

The recovery out of the recession for the advanced economies will be difficult.

Growth in Europe has stalled.

Growth in America has stalled.

The effects of the Japanese earthquake, high oil and food prices have created a drag on growth…

…but fundamentally we are still suffering from the aftershocks of the world financial bust and economic collapse in 2008.

That means families in Britain and Canada are facing a tough time.

I believe that Prime Minister Harper and I share the same analysis of what is wrong and what needs to be put right.

The world is recovering from a once in 70 years financial crisis…

…and is suffering from debts not seen in decades

This is not a traditional, cyclical recession, it’s a debt crisis.

When the fundamental problem is the level of debt and the fear of those levels then the usual economic prescriptions can not be applied.

It is not simply a question of using conventional fiscal and monetary levers to stimulate growth until confidence and normal economic activity returns.

When households have borrowed too much…

…when banks are shrinking their balance sheets and rebuilding their capital…

…and when governments are accumulating huge stocks of debt…

…, the power of those traditional levers is limited.

The economic situation is much more dangerous and the solution for most countries can not be simply to borrow more.

Why?

Because if the government doesn’t have the room to borrow more in order to cut taxes or increase spending…

…people and markets start worrying about whether a government can actually pay back its debt.

And when this happens confidence ebbs away and interest rates will rise, hitting people with mortgages, and hitting companies that want to borrow to invest.

We can see this happening right now in some European countries.

Of course there is a crucial role for monetary policy – to help support economies in the short term.

And, of course, those that have room can use fiscal levers to do the same

Yes, demand matters.

But boosting it by undermining financial stability is self-defeating and damages the confidence on which economic growth depends.

So a long term solution must tackle the fundamental problem. We must address the problem of excessive debt.

Let me say again, it’s a debt crisis.

Only when we properly recognise this can we begin to address…

…banks which are too weak to pass on lower interest rates to businesses and households…

…and consumers and businesses whose fear of debts mean they don’t want to borrow to spend.

Recovery from a debt crisis is both different and more difficult, than recovering from a cyclical recession.

Ultimately, there are only three ways to deal with the overhang of debts: rescheduling them, writing them off, or paying them back.

Highly indebted households, and governments simply can not spend their way out of a debt crisis.

The more they spend, the more the debts will rise and the fundamental problem will grow.

Instead, we need to confront the problems directly. I believe we need to do three things.

Get to grips with the debt and restore credibility and confidence.

Make it easier to do business and create jobs by freeing up our economies.

And, in a global crisis, working together across the world co-ordinating our action – including boosting world trade, starting with the Doha Round.

Let me briefly take each in turn.

TACKLING THE DEBT

First and foremost we need to deal directly with our debts.

In Britain, we have learnt from Canada’s own experience when you were able to take action to pay down debt.

When our government took office in Britain in May 2010, we inherited the biggest budget deficit in our peacetime history.

We faced the risk of rising interest rates, falling confidence and even questions about our credit-worthiness as a country.

So we’ve taken some really tough decisions to rescue our public finances and begun to implement them.

How fast you need to go will depend on circumstances. With a deficit that was forecast to be the highest in the G20 and ballooning debt, the UK has had to act quickly.

Britain's experience contains an invaluable lesson: it is possible to earn credibility and get ahead of the markets through decisive action.

But by its nature a global crisis cannot be solved by countries acting alone.

In a global economy, we need every country in the world to show the leadership to address its problems.

With others, we continue to argue we need to increase global demand by rebalancing where surplus countries spend more, helping deficit countries to increase their exports and grow faster.

Of course this is vital and will help the deficit countries to grow and repay debt.

But more spending by surplus countries will not on its own deal with the debts.

And that brings me to the Eurozone.

I was an adviser in the Treasury when we fixed our currencies through the Exchange Rate Mechanism.

It failed.

And it taught me that different countries sometimes need very different economic policies.

So I don’t support Britain joining the Euro and never will.

But Britain has a strong interest in the success of the Eurozone.

We all do.

Because the problems in the Eurozone are now so big that they have begun to threaten the stability of the world economy.

Why?

Because the Euro area is one of the largest markets in the world. And the Euro is the world’s second largest currency.

And while these problems aren’t being solved, while they grow, businesses don’t invest, confidence is sapped.

In the Euro area itself. And, increasingly, worldwide also.

Eurozone countries must act swiftly to resolve the crisis.

They must implement what they have agreed...

…and they must demonstrate they have the political will to do what is necessary to ensure the stability of the system.

One way or another they have to find a fundamental and lasting solution to the heart of the problem – the high level of indebtedness in many Euro countries .

And whatever course they take Europe’s banks need to be made strong enough so that they can help support the recovery, not put it at risk.

At the same time we can not put off the fundamental problem of the lack of competitiveness in many Euro area countries.

Endlessly putting off what has to be done doesn’t help, in fact it makes the problem worse, lengthening the shadow of uncertainty that looms over the world economy.

MAKING IT EASIER TO DO BUSINESS

When you can’t cut taxes or increase spending to boost demand…

…and when interest rates are already low…

…what’s left to government is to take the simple, straightforward steps to boost potential for growth.

And we should remember that in the long term it’s not fiscal policy that makes economies grow, it’s making us more productive that’s essential for our future long-term prosperity.

This means making it easier to set up a new company, employ people, invest and grow a business.

This may sound simple but it doesn’t mean it’s easy.

You quickly find you come up against all sorts of barriers, obstacles and regulations.

In Britain we’re determined to address this.

We are creating the most competitive corporate tax regime in the G20.

Cutting the time it takes to set up a business.

Reducing tax costs and regulatory burdens for new businesses.

Putting regulations up on the internet so people can see clearly what they are.

And we have issued a “one-in-one-out” rule for regulation. So any Minister who wants to bring in a new regulation, will have to get rid of an existing one first.

We are prioritising science and infrastructure.

We’re also reforming our education system and introducing new apprenticeships to help improve the skills of our young people…

And I’m delighted that we are following in the footsteps of Prime Minister Harper and hosting the next World Skills summit in London next month…

…which will see 1000 young people from 50 countries competing to be the best of the best in 46 different skills, from robotics to web design.

GOVERNANCE AND TRADE

So I’ve argued that we need to act to get to grips with the overhang of debt in our national economies…

…that we need to make our economies more competitive…

…and also that a global crisis cannot be solved by countries acting alone.

Now there are those who argue that international action needs new global institutions.

I don’t agree.

It’s not new institutions, it’s political will we need – and opportunities like the G20 which can develop a political consensus.

You can have all the meetings, sub-committees and processes in the world…

…but if there’s no political will, we will never tackle these problems and secure the strong, sustainable and balanced growth we need.

That’s why the political will of leaders at the G20 summit this November is so important.

Nothing sums this up better than the failure to get a global trade deal.

We've got to re-fight the argument for free trade all over again.

And for me there’s nowhere better to do it than here in Canada – a country built on trade.

Because the truth is that trade is the biggest wealth creator we’ve ever known.

And it’s the biggest stimulus we can give our economies right now.

A completed trade round could add $170 billion dollars to the world economy.

And yet too many people still seem to believe that trade is some sort of zero sum game.

They talk about it quite literally as if one country’s success is another country’s failure.

That if our exports grow then someone else’s will shrink.

That somehow if we import low cost goods from China we’re failing.

As if all the benefits of China’s exports go to China alone.

When actually we benefit too…

…from choice, competition, low prices in our shops.

The whole point about trade is that you're baking a bigger a cake.

Everyone can benefit from it.

So I come here to Canada to stand up for free trade…

…to promote more trade and more investment between our two countries…

…and with other countries around the world too.

At the G20 in Cannes we need to agree a credible plan to take to the WTO ministerial in December as a basis for concluding the Doha Development Round.

And if we can’t get a deal involving everyone then we need to look at other ways in which to drive forward with the trade liberalisation the world needs …

…ensuring the continued work of the WTO preventing any collapse back to protectionism…

…but going forwards, perhaps with a coalition of the willing...

...where countries like Britain and Canada who want to, can forge ahead with more ambitious deals…

…and others can join later if they choose.
And let’s set an example to the world by concluding early next year the comprehensive economic and trade agreement between Europe and Canada…

…which will deliver a huge boost to growth and jobs on both sides.

CONCLUSION

Mr Speaker, let me conclude by saying this.

The relationship between Britain and Canada is deep and strong.

At the Chateau Laurier Hotel in 1954, with the Second War still in mind, Winston Churchill put it like this:

“We have surmounted all the perils and endured all the agonies of the past. We shall provide against and thus prevail over the dangers and problems of the future…withhold no sacrifice, grudge no toil, seek no sordid gain, fear no foe”.

So let us in this new century, look to the future, secure in our joint values, and seeking new opportunities.

We are two nations, but under one Queen and united by one set of values.

Let us fear no foe as we work together for a safer, better world.

Thank you.

THE FOLLOWING IS THE COMPLETE TEXT OF CANADIAN PRIME MINISTER STEPHEN HARPER'S WELCOMING ADDRESS FOR BRITISH PRIME MINISTER DAVID CAMERON:

Monsieur le Président du Sénat, Monsieur le Président de la Chambre des communes, sénateurs et députés, juge en chef et juges de la Cour suprême, distingués invités,

Mesdames et messieurs, Ladies and gentlemen.

It is a great privilege to welcome to our Parliament today the Prime Minister of the United Kingdom, the Rt. Hon. David Cameron.

On a personal note, David, I have seen you recently and often …

Many times, in fact, both as Leader of the Opposition and Prime Minister, both in Great Britain and around the world …

But it is a special pleasure to meet you here, in Canada, where you are joining a distinguished register of British prime ministers who have addressed this chamber.

Par exemple, plus récemment, en deux-mille-un (2001), le très honorable Tony Blair a pris la parole devant la Chambre.

The great Margaret Thatcher spoke in this place on two occasions.

And, perhaps most famously, it was right here in 1941, during some of the darkest days of the Second World War, that Sir Winston Churchill made his famous “Some chicken, some neck!” speech that did so much to rally spirits on both sides of the Atlantic.

Another of your predecessors, Sir Anthony Eden called appearing before this House an “almost daunting experience for the visitor.”

Let me assure you, Prime Minister, that he found, as will you that in the traditions we inherited from your own country …

The Commons treats its visitors much better than we do each other.

Nous vous souhaitons à nouveau la bienvenue et nous avons hâte de vous entendre dans quelques instants à peine.

But first, I ask the indulgence of this House, to refer briefly to those matters - security matters, economic matters - that have brought Prime Minister Cameron and myself together – usually with other world leaders – seven times during the last 16 months:

Matters, I must say, in which Prime Minister Cameron’s leadership has been decisive, matters that will continue to demand his firmness of purpose …

Such as in Libya.

Je pense en particulier au rôle que nos deux pays ont joué, avec l’aide essentielle de l’autre grande mère patrie du Canada, la France, dans les efforts déployés pour aider le peuple libyen à se bâtir un avenir meilleur.

Dans cette entreprise, nous avons été animés par certaines convictions fondamentales.

We believe, for instance, as the Rt. Hon. Harold Macmillan once observed in this very place and I quote: “the state is made for man, and not man for the state.”

We also believe that when we help others to be free, it is our own liberty that we also secure ...

Those ancient rights of democracy and the rule of law that our two countries share that are the common aspiration of millions of people around the world.

They are, clearly, the aspiration of Libyans themselves.

Our mutual hope is that they will someday enjoy them in all their fullness.

Puis, bien entendu, il y a les très graves difficultés qui affligent l’économie mondiale et qui nous réunissent en tant que partenaires du G20.

Neither of us will be accused of exaggeration, if we acknowledge that the most immediate test confronting us all is to avoid the devastating consequences of a return to global recession.

Yet, without key countries taking systemically appropriate and coordinated economic measures without resistance to protectionism and acceptance of more flexible exchange rates …

Without fiscal consolidation . . .

Without a commitment by governments to cut rising deficits and reduce what are, in some cases, dangerous levels of national indebtedness . . .

Without things such as these, we will not avoid such a recession.

J’aimerais donc souligner devant la Chambre le leadership exercé par le Premier ministre Cameron au chapitre des questions économiques de l’heure:

First, the strong guidance Prime Minister Cameron has offered to our G20 partners, and his determined advocacy for fiscal discipline.

Second, his consequential handling of the difficult fiscal choices confronting the British economy.

Truly, Among our G20 partners, he has been a leader by example.

Prime Minister, here in Canada we have followed your progress carefully, and I can safely say that where it matters most, your thinking parallels that of our own Government.

To be precise, while deficit reduction is not an end in itself, the G20 fiscal targets agreed in Toronto last year nevertheless remain an essential elementfor rebuilding the economic health of industrialized nations.

Comme vous, Monsieur le Premier ministre, nous combinons ces objectifs avec un plan clair pour stimuler l’emploi et la croissance économique.

Plus tard cette année, les dirigeants du G20 se réuniront à Cannes.

I daresay we shall have much to occupy us at the G20 in Cannes.

Honourable members, without further ado, it gives me great pleasure to introduce a man of immense resolve and principled action and a great friend of Canada, the Prime Minister of the United Kingdom, the Rt. Hon. David Cameron.

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