Labour at the crossroads

Tuesday's papers led with the interesting story that the EU is concerned Britain will be unable to lower its debt to the required 3 per cent of GDP by 2014.

This casts aspersions on the strategy of the government before next week's budget - indeed a veiled threat was made at the weekend by the head of Japanese bank Nomura, that a hung parliament would lead to devaluation of the pound.  

And as if to add to the growing right-wing consensus that public spending cuts should pay for the bankers' recession, the media are emphasising the effect of enormous cuts already made in Greece and then telling President George Papandreou he hasn't done enough.

The "new" Tories justify their planned savage cuts in public spending on the basis that the huge borrowing required to buy out the banks has to be repaid by cutting public expenditure and thus rapidly increasing unemployment for both the people cut and subsequently for anyone they used to buy goods from.

The approach taken by the government during the banking crisis of 2008 was a mixed one. In part it was the product of a process of financial deregulation stretching back to Thatcher's "big bang" of 1982 and Gordon Brown's decade-long pursuit of financial deregulation.

His response of taking controlling shares in all of the major banks when the crisis began was a correct one, but there Brown's interventionism ended.  

Instead of converting the major banks into fully publicly owned companies, the shareholding was transferred to a holding company, the sole function of which is to dispose of the shares as quickly as possible.  

On the Politics Show last Sunday Gordon Brown claimed that every penny loaned to the banks would be repaid by them.  

The manifesto for the general election is being written and Alistair Darling is putting the finishing touches to next week's budget.

This is more than just a crossroads for Britain, it is a huge crossroads for Labour.  

Any politician seriously proposing to reduce British borrowing to the levels now required by the EU in less than three years ought to look to Greece, and the political and public reaction to the slashing of wages, services and jobs.  

The new Labour strategy of limited financial regulation, the contracting out of services and the reluctance to raise thresholds for the richest in society has left the gap between the rich and the poor as wide as ever.  

Welcome as the government's anti-poverty measures have been, all of this is clearly at risk if we move into huge job losses, tax increases, and an advancing recession. More than ever, the arguments for intervention and socialism are the most relevant.

The omens however are not good.

Gordon Brown's attack on trade unionists and the staff at BA seems as ill-judged as it is ill-timed, and certainly unnecessary.

The PCS workers' strike over the reduction in their redundancy pay met a huge response and Labour needs to remember where it comes from and who has supported us in the past.

Real chutzpah

Israel really takes the biscuit in the brass neck stakes. Following the Goldstone revelations over Operation Cast Lead its response was to condemn Goldstone, the Human Rights Council, the UN and every decent-thinking person around the world who expressed legitimate concerns over the illegal use of white phosphorus and the attacks on civilian targets.  

Barack Obama's rather timid approach to Israeli settlements by merely asking for a freeze on their development was met with a flat no by Binyamin Netanyahu - it's clear Tel Aviv has the upper hand in these matters.

However, Israel's behaviour during Operation Cast Lead and the continued impoverishment and imprisonment of the people of Gaza and the detention of Palestinian parliamentarians is isolating them as never before.  

The time has surely more than come for the British government to send two very firm signals to Israel.  

Firstly, that universal jurisdiction will stay and those against whom there is prima facie evidence of internationally illegal activities such as the use of white phosphorus must be brought before British courts should they arrive in this country.  

Secondly, that Britain will use all its influence at the European Union to not only block the upgrading of Israel-EU Trade Association agreements but to suspend it entirely.  

The Jerusalem Mayor Nir Barkat is speaking at Chatham House on March 22 so show up the demonstration at 5pm to join others who wish to make their feelings known to him.

On March 23 the EU will be discussing the upgrading of the EU-Israel Trade Association Agreement so write to David Miliband urgently to raise your objections.