Episode 12 BBC News: The Editors

Welcome to Whitehall in central London. A century after 1914, is

another world War a possibility? Is the world economy really

recovering? And has Britain cut its defences too far and too deeply?

The Cenotaph in Whitehall, one of the finest designs in the modern

world, stark and elegant. Everything in all of our lives is still

affected one way or another by the First World War, that dreadful

process that dragged the mostly peaceful continent of Europe into a

conflict which, on and off, went on for 31 years, from 1914 to 1945.

Without it, there would presumably have been no nazism, no Stalinism,

no Cold War, and yet modern, total war always brings sociologically and

technological advances. Women's writes, increasingly powerful

aircrafts, computers, drones. But we have got past that stage now,

haven't we? World War? Haven't we? I wish I could be sure of that.

From 1914 to 1918, around 10 million soldiers on all sides died.

Afterwards, people thought it would make war on impossible. In fact,

there have been 300 wars since then. This is trying pot, just one of

1,000 cemeteries on the Western front.

The First World War was fought at exactly the wrong moment in

history. There were mass systems of transport and control, but no

radios, no heavy aircraft, no effective means of countering

artillery and machine gun. Peace and optimism of the 19th century ended

here in misery and squalor. There is peace and optimism now. Could this

end like that did? I went to Oxford to talk it over with Britain's for

most war historian, of all souls College. Warfare of the 1914 kind

won't happen again, just because most states have moved away from

mass armies. And most states are able to use technologies in much

more precise ways than they were able to use them in 1914-18. One

argument would be that a combination of unmanned vehicles of one sort or

another, robots, and others of cyber, create alternative ways of

competition, some of them using force less obviously and involving

killing less obviously. Surely, though, war in Europe is impossible

now? After all, in 2012, the European Union won the Nobel Peace

Prize for ending war on the continent. Yet the First World War

cemeteries, whether big or small, like this one on the battlefield of

the Somme, filled with the victims of a conflict which started because

big countries were manipulated by smaller ones.

Think what is going on right now in Ukraine. A small, deeply divided

country is causing real tension between Europe and Russia. World War

doesn't happen because country cases we going to declare a World War.

That isn't how it happens. So how does it happen? The power of small

states to manipulate big states. Serbia is very important to what

happens in 1914. However you see its degree of responsibility, it is

engaging its own war when it begins the war in its own neck of the

woods. It is not saying, we need a World War. One way of seeing it is a

sequence of separate regional wars which aggravate to become something

bigger. The grass has long since covered

over the naked rawness of the few remaining trenches on the Western

front. But if war in Europe isn't so likely, where else could it break

out? We used to think of the Middle East as the region which might cause

a World War. But what about the Far East nowadays, where a rising

military and industrial power, China, is facing up to an existing

power, Japan, over a tiny group of uninhabited islands in the East

China Sea? The Americans, of course, are the allies of the

Japanese in Asia. It is gradually replacing the Middle East. As the

United States withdraws with the pivot of Asia, Israel's capacity to

tweak the American tail is reduced and as the United States becomes

less dependent on Middle Eastern oil supplies, because of fracking

becomes more self-sufficient, more than self-sufficient in energy,

where is the United States most concerned about? The answer is

clearly the Pacific. Before 1914, many people thought war

couldn't happen because the economies of the main European

countries were so closely intertwined. A man called Norman

Angell wrote a bestseller, The Great Illusion, which argued that the war

was so crazy, nobody would start one. What he didn't realise was that

wars are usually sparked off by the unexpected. Nowadays, we have

learned that major wars can come completely out of the blue. On what

seemed like a normal day, the 11th of September 2001, a dreadful series

of attacks sparked off a war which has lasted right up until now. You

know, we should be ready for the possibility of the unthinkable. Most

of the things which have changed the world in which we live today have

been the consequence of dramatic and unexpected change was the very rapid

end to the Cold War, which fortunately was entirely benign. The

911 attacks, which obviously were not the nine. These are the way

point of how we understand our recent history --not benign. It is

humanity collectively going to face war in the future? Absolutely. There

are plenty of sources of conflicts in the world. Should we be

complacent about it? Absolutely not. These are the names of thousands of

missing men, each of them blown to pieces or simply disappeared in the

mud. My great uncle was a captain in the East Surreys. He actually

survived the Somme but was dreadfully injured. He lingered on

for 50 years and died a homeless beggar about revenge. --on a railway

bench. Everywhere here, you are in the presence of small-scale but

devastating tragedies. I have spent the last 50 years reporting on

conflict but nothing, thank God, remotely on this scale. And although

it may not seem like it, far fewer people die in war nowadays. In the

21st century, it has been an average of 55,000 a year. Dreadful, yet the

figure was twice that in the 1990s and three times as many in the

1980s. Here on the Western Front, it was 150 times as many. Not

everything you see automatically gets worse.

Downing Street, the home of political power in Britain since the

18th century. The people who live and work here nowadays, and in the

Chancellor's office next door, are naturally extremely keen that

Britain should regard itself as finally climbing out of the

financial crisis that has lingered on for five long years. There is

even talk here of rate rises nowadays. But remember what happened

in Japan 20 years ago. Property values ballooned and ballooned and

then burst and ever since, people there have been so nervous that the

Japanese economy has never got out of stagnation. Could that be our

future too? Or is the world genuinely starting to lift itself

out of recession? Another of our contributing editors has been

travelling the world to find out. After five years of slow growth, the

outlook is starting to look brighter for the global economy. Nowhere more

so than Britain. This year, the economy will finally recover to the

size it was before the crash and, believe it or not, the growth rate

is even outpacing that of other rich countries. Economists are saying it

for policymakers are forecasting it. But when will it feel like a

recovery to us? Memories of the crash are still

fresh. Unemployment remains high. Price rises have squeezed our

incomes and our pay isn't keeping up. It is a similar picture in

America, where the housing crash set of the global financial crisis.

Small towns like this one in Maryland have been in economic

degrees. I met with the Mayor and asked him how the town was faring.

Speaking at the was a joke we used to tell around here that if we had a

depression, it would take is ten years to know it. Because we have

been depressed for so long. It is small towns like this one that the

US central bank, the Federal reserve, must help. Its former head

hands over a tough task to the new chair. In his era, boom turned to

bust and to support the recovery, he flooded the economy with cheap cash

for five years and kept rates low. Now that the economy is getting back

on track, the new era will be different and it has been made clear

what the focus will be. She and other central bankers, like those at

the Bank of England, are pledging to keep rates low. But is it working or

just leading to more debt fuelled spending?

Consuming based on borrowing is what got us into a mess before. Now, in

the UK, we are borrowing even more. In fact, household debt is at a

record high, even higher than before the crash. It is because five years

ago, interest rates were slashed to a smidgen above 0% to support the

recovery. The problem is, previously when rates were low, cheap credit

also helped fuel a housing boom that eventually went bust. With rates now

at the lowest that they have ever been, is it creating another housing

bubble? A house like that at 3,000,000... I

met the editor of Money Week, who tells me her readers are most

concerned about the housing market. It doesn't sound like the recovery

is driven by sustainable drivers? At the moment, it would be hard to

argue that this is a long-term sustainable recovery. Three years of

growth has come very clearly from financial services and the rest you

can pin on housing. This is taking us back to the mistakes we made

before, relying on two sectors to drive everything. We need to see

more manufacturing, more than a way of exports and a broader spread of

sectors running things and also things that aren't purely driven by

very low interest rates. You have to remember that the housing market is

almost entirely driven by the price of money, which is interest rates,

and one day, that has to rise. Is it the right kind of recovery? When

rates go up, debt could become unsustainable. Well, relying on debt

to grow could just result in another crisis. But what's the alternative?

How well can a country grow without relying on bar owing?

-- borrowing? Japan is a country that's been

through it. It no longer grows via debt after its housing market

crashed and it has been stagnant ever since. I went along to see the

economist who wrote the book on Japan and asked Richard why growth

hasn't returned? Japan doesn't seem like it came through it even though

the bubble burst over 20 years ago? One the balance sheets are repaired,

you realise that people are still not borrowing money. This is a very

difficult problem to get hold of because it is a psychological

problem, right? If it is a mechanical problem, you do this and

then something will happen, but it is a psychological problem until you

get over the trauma, you just have to keep on trying different measures

until you get off the trauma. How did the US get over the trauma after

the Great Depression? It took them a long time. It took 30 years until

1959 for interest rates to return to the average 1920s. The Great

Depression started in 1929 and it was 1959 when interest rates

returned to 4% and it took that long.

Dao Due to being traumatised by debt, Japan's growth has been slow.

Because without relying on debt, what you spend depends on what you

earn and that's not helped by a ageing population where there are

more pensioners than young people in work. This is what the West worries

about. Lower demand and slower growth. If Japan can reverse its

stagnation then there is hope for the UK and the US who are facing

tepid recoveries five years after their banking crisis. If Japan

can't, then it is a glimpse of the future for other rich countries who

have the same ageing population, but are just a few years behind Japan.

The Government aims to squeeze more out of workers like these in Tokyo's

fish market. If they are more productive then their bosses will

pay them more and the recovery would be on a sounder footing.

It is not just the developed economies, China's population is

also ageing. So it is not an easy choice anywhere. Growing via debt

maybe unsustainable, but the alternative could be slower growth

than what we're used to. The global and British economy will recover

this year, but it maybe sometime yet before it feels like it. But

importantly, growth has returned and tomorrow looks more promising than

today. Whitehall here is stacked with

statues to Britain's military heroes. Montgomery here. But this

may surprise you, the world's fourth largest military power, that's after

the painful cuts in the 2010 Strategic Defence Review. Last month

the former US Defence Secretary, Robert Gates warned that Britain's

defence cuts limited its ability to be a reliable military ally. He

singled out cutbacks to the Royal Navy and reminded us for the first

time since the First World War Britain won't have a single aircraft

carrier until the ones being in Scotland come into service. Caroline

Wyatt wonders whether the defence cuts have really gone too far?

For centuries, these small islands prided themselves on their might as

Britain punched well above her weight in the world, sending

warships and soldiers across the seas. The Royal Navy and Army helped

create the British Empire and in 1982, the Falklands War showed

Britain could still fight to win even thousands of miles from these

shores. But in the past few years of

economic austerity, the UK's defence spending dropped while that of

others countries from China to Saudi Arabia has risen creating some say a

perfect storm for defence so the question we are asking is have we

cut too far in defence and should we re-think our ambitions on the global

stage? At the Cenotaph in Cardiff, Simon

Weston remembers his fallen comrades. He remembers the terrible

burns he suffered. Today, he is appalled by the level of cuts to

Army numbers. It is under half the size it was when he joined with

thousands of soldiers made rebundant. -- rebundant. We will

sell ourselves short. You look at all these people here and the

talents and the skills, the medical corp, we lose all those talents and

all those experiences and all the things that they can pass on to

other people. They are gone. They're not coming back. Do you think that

we, as a nation, have cut defence spending too far? Without a doubt.

We've got far too few people and the MoD and the Government have to stop.

Stop before it goes too far. Before there is no gaining the ground that

they've lost. You cannot bring a war in under budget and you certainly

cannot prepare for conflict without spending money properly. And we're

in a situation where we are selling people short. Would you still join

the Army today? Would you advice one of your children to join the Army?

Not a chance. Despite the cuts, the Army still

needs young men and women fight to fit -- fit to fight for the future.

The current plan is to have more reservists even as the number of

regulars come down, but take-up has been slower than hoped, but on the

day I visit this recruiting centre in Cardiff. I'm preparing myself for

the challenges that lie ahead. David Jones has come to sign up for the

reserves. It is just the adventure really and the commitment, the

professionalism, you see soldiers putting in every day. I think I can

transfer that to my own career. The Army has gone back to training on

Salisbury Plain. No one knows what threat could be around the corner.

The UK aims to be able to fight most. By land, sea or air. Man power

was hit hard in the last Defence Review. Their concerns are aired in

the calm of the Royal United Services Institute, the military

think-tank founded in 1831, now run by Professor Mike Clarke. If we lack

anything, it is sustainability. It is staying power given that our

ambitions are to be a bit like the United States at about one tenth the

size. Have we cut too far in defence? I think in general, we've

cut further than our ambitions would allow us so we have either got to

scale back our ambitions or we have got to say it is important that we

do those things and we have got to spend something more on defence more

like something in the order of ?2 billion or ?3 billion after 2015

than we're planning to. A number of armoured vehicles are

slowly returning home from Afghanistan. Huskies and Mastiffs.

The next battles will be closer to home too between the MoD and the

Treasury. The forces say the last fence Review was Steph devastating,

the next, it is hoped, will be more considered. I hope the signal that

we're send is that the UK is committed to living within its

means. Defence can't be exempt from that and I've also been clear that

you can only build a strong and sustainable defence on a strong and

sustainable economy. The two are indivisible. It is not your view

that we have cut too far? I would like the defence budget to be

bigger. I would like to have a bigger military, who wouldn't? But

where we are at the moment is a position that we can sustain and the

budget will allow us to do that just. It is not allowing us to put

our feet up while we do it, we're having to pedal very hard to make

the savings, to deliver the efficiencies that make it possible

to have that capability. And this is where much of the UK's

defence budget is going, creating its two biggest aircraft carriers

ever. The Queen Elizabeth Class. The cost is just as breath taking. Now

over ?6 billion, not counting the jet that will fly off them. It is

not yet clear whether the UK will be able to afford to run two carriers

or one and whether both will be built. That's another battle for the

next Defence Review along whether to replace Trident, the nation's

nuclear deterrent. The UK can console itself than in a few years

time, it will have two world beating aircraft carriers with one due to

sail the seas and project Britain's power abroad. If a Government's

first duty to its people is defence of the Realm, perhaps it is time for

a national debate about what sort of defence we want and crucially, how

much we're willing to pay for it? Britannia doesn't rule as much of

the waves as she once did, but these islands remain a serious military

player. Beneath the surface, the UK's sailors, soldiers and air men

are having to work hard after the last wave of cuts. The fear is they

couldn't weather another similar storm without real harm. They are

often unseen, they remain a guarantee, relied on to protect

these shores and our way of life, something more fragile than we

think. Everything seems so peaceful now

here at. This area was blasted by the heaviest artillery barrage in

history that people thought would never grow here again. But nature is

so resilient, you never think now that anything had ever happened

here. It is something of the same with human beings, in spite of all

these people who died in the First World War and in the huge epidemic

at the same time, a census soon after the First World War showed

that the British population had actually gone up by some way. Not

even the effects of war, it seems, are necessarily permanent. Well,

that's it from the last of the current series of The Editors. Until

we meet again, goodbye.