30/05/2012 Newsnight


30/05/2012

Jeremy Paxman is joined by Nobel Prize winner Paul Krugman, Ken Rogoff and Greek minister Giorgos Papakonstantinou to discuss the economic future for Greece, Europe and the world.


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Transcript


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Hello, within weeks, Greece could have tumbled, stalked, or been

:00:13.:00:18.

chucked out of the euro. An intense nervousness, panic in some places,

:00:18.:00:22.

is at large. All of us will be affected. Tonight, how it could

:00:22.:00:26.

happen and what will be the consequences. If Spain falls apart,

:00:26.:00:30.

will the face of Europe be changed forever. We have the Nobel Prize-

:00:30.:00:34.

winning economist, Paul Krugman here, the Harvard economist,

:00:34.:00:42.

Kenneth Rogoff, and from Athens, former Greece politician, Giorgos

:00:42.:00:45.

Papakonstantinou. Many think that the Germans will

:00:45.:00:48.

soon blink, that forcing Greece out of the euro will be unthinkable,

:00:48.:00:52.

what if they are wrong? We will tackle the question whether

:00:52.:00:55.

George Osborne's medicine for this country is not so quietly killing

:00:55.:00:58.

the patient. The Government's central aim is to

:00:58.:01:02.

cut the deficit and establish international credibility, what if

:01:02.:01:04.

the eurozone crisis means they can do neither.

:01:05.:01:08.

We will hear from Dublin, where they are being asked to vote for

:01:08.:01:15.

long years of austerity, to atone for their bankers' sins. David

:01:15.:01:18.

Cameron's former Director of Communications, Andy Coulson, has

:01:18.:01:21.

been charged with perjury tonight, after being questioned by police in

:01:21.:01:29.

Glasgow. We will have the latest.

:01:29.:01:33.

The world's biggest company, ensuring people who export goods,

:01:33.:01:36.

said today it was no longer covering anyone who wants to send

:01:36.:01:40.

stuff to Greece. Nothing will change before the election there on

:01:40.:01:44.

June 17th, and the latest opinion polls show the biggest parties in

:01:44.:01:48.

favour and against the bail out are at absolutely level pegging. Which

:01:48.:01:52.

is no help to anyone, really. In the meantime, there is talk of

:01:52.:01:55.

power cuts because there is no money to pay energy suppliers. So

:01:55.:02:01.

the rest of the eurozone, now contemplates something we were told

:02:01.:02:07.

was inconceivably, recently, that like a bad kebab, Greece is vomited

:02:07.:02:11.

out of the single currency. What happened today? Almost every day

:02:11.:02:15.

brings headlines to which the subtext is, confusion, lack of

:02:15.:02:22.

focus, unreality, incompetence, general clutching at straws, as the

:02:23.:02:27.

train hurtles towards you. Today was no different. You mentioned

:02:27.:02:32.

today that the Greek press got hold of a document to the Prime Minister

:02:32.:02:36.

that they may face blackouts because they can't pay electricity

:02:36.:02:40.

bills. We find out in the next 24 hours how much money has fled

:02:40.:02:47.

Greece over the past week. We know if the -- in the past three months

:02:47.:02:53.

58 million has fled Europe over the past few months. Spain is in

:02:53.:02:55.

serious trouble and needs a bank bail out. There is the mechanism to

:02:55.:02:59.

do, that the European Union has the money to do that. Right now Spain

:02:59.:03:02.

doesn't want to take that money. It is saying, we don't want to be like

:03:02.:03:05.

Ireland, we don't want to be the slaves of Europe. This is, of

:03:05.:03:09.

course, on the eve, tomorrow, of the Irish referendum. Where the

:03:09.:03:14.

Irish are going to sign up for an austerity deal that the Spanish

:03:14.:03:18.

have just negotiated a one-year opt-out from, that is conyou fewed,

:03:18.:03:24.

so is everybody else -- if that is confusing, so is everybody else.

:03:24.:03:28.

Greece could leave the euro? Ever since the Brussels summit last week

:03:28.:03:33.

the feeling is, most people think, look, Merkel is talking tough to

:03:33.:03:39.

try to get Greek voters to go back to the centre. To recoil in horror

:03:39.:03:43.

from any exit from the eurozone, so they vote how the European Union

:03:43.:03:46.

would like them. Most people think, whether it is just before or just

:03:47.:03:51.

after the elections, the Germans will have to relent and say it is a

:03:51.:03:55.

bluff. And they will give the Greeks some extra time to pay, like

:03:55.:03:58.

Spain, another year to meet the targets. That is what the money is

:03:58.:04:02.

on at the moment. But, as we are about to see, the ability of

:04:02.:04:07.

politicians to effect economics, ever since Lehman Brothers, has

:04:07.:04:14.

been very limited. If Greece left the euro, the

:04:14.:04:19.

reaction would be frantic. Every Government, every Central Bank, and

:04:19.:04:24.

all financial markets would be faced with immediate choices.

:04:24.:04:28.

But the first 48 hours of a Greek exit would depend on precisely why

:04:28.:04:33.

the exit happened. Politically it is impossible to

:04:33.:04:36.

expel Greece from the eurozone, and none of the parties likely to win

:04:36.:04:41.

the election want to leave, including the left. So a Greek exit

:04:41.:04:47.

would be messy. Driven by economics, driven by capital flight, bank run,

:04:47.:04:52.

and the breakdown of cross-border payment mechanisms. If you lent

:04:52.:04:57.

money in euros to Greece, and your debt is redenominated into drachmas,

:04:57.:05:01.

which falls against the euros, you will get less money back. There is

:05:01.:05:04.

also a significant likelihood that banks would go under in Greece, a

:05:04.:05:08.

large number of companies would probably be bankrupt as well. So

:05:08.:05:12.

there would be more straight forward forms of default as well.

:05:12.:05:19.

With the far left riding high in the election. And the far right on

:05:20.:05:23.

the March, any financial collapse would -- march, any financial

:05:23.:05:26.

collapse would spell trouble. There is already trouble.

:05:26.:05:30.

We have got total polarisation, we have an economic programme the

:05:31.:05:34.

Greeks didn't vote for. We have violence in the streets. We have

:05:34.:05:40.

got Neo-Nazis in parliament. That is before any problems of euro

:05:40.:05:44.

exit? Yeah, absolutely. Before any problems of euro exit. The other

:05:44.:05:48.

thing people say, it is awful, but it is awful now.

:05:48.:05:52.

For London, as a financial centre, there would be deep concern. Not

:05:52.:05:56.

over Greece, but over the three trillion euros worth of foreign

:05:56.:06:02.

money sitting in Italy and Spain, which might leave.

:06:02.:06:06.

The very sense of crisis and uncertainty, is jittering the

:06:06.:06:10.

global markets, which is having an effect on our real economy. It is

:06:10.:06:15.

not through trade or diplomatic links, and they would be deeply

:06:15.:06:19.

concerned that the sense of instability would mean that any

:06:20.:06:25.

other institution that was not completely 100% robust, would sense

:06:25.:06:31.

the shockwaves and find themselves in a more perilous situation.

:06:31.:06:35.

British banks' exposure to Greece is small. Exposure to sovereign

:06:35.:06:44.

debt of Italy and Spain, is just over 10 million to Barclays, RBS

:06:44.:06:48.

and HSBC, but it would decrease the value of eurobonds across the

:06:48.:06:53.

eurozone. And here RBS, with 0 billion total exposure, is among

:06:53.:06:58.

the highest in Europe. In the first 48 hours after a Greek exit,

:06:58.:07:01.

everything would depend on preventing the financial collapse

:07:01.:07:05.

of Spain. The money to do that exist, right now Spain is quibbling

:07:05.:07:12.

over the terms of accepting it. As for Greece, it would face not

:07:12.:07:15.

only banking and monetary chaos, its exports would more or less

:07:15.:07:20.

double in cost, that is bad. There is a lot of fear. People are very,

:07:20.:07:23.

very worried about this. It feels like falling off the edge of a

:07:23.:07:28.

cliff to a lot of people. There is a lot of fear about poverty, about

:07:28.:07:32.

hunger, about political chaos. Greece imports 40% of the food at

:07:32.:07:37.

the moment. Almost all its medicines, all its oil. And as the

:07:37.:07:41.

Greeks left, the credibility of the euro as a permanent currency union

:07:41.:07:48.

would be shattered. Giorgos Papakonstantinou is in

:07:48.:07:53.

Athens, where he was until recently a Government minister,'s now a

:07:53.:07:57.

PASOK candidate in the forth coming elections, and taking an anxious

:07:57.:08:02.

interest in things there. Paul Krugman is a Nobel Prize-winning

:08:02.:08:08.

economist, who is betting on an exit from the euro zone. Do you

:08:08.:08:12.

think as a currency the euro is worth saving? I think it is a

:08:12.:08:17.

mistake, but it is a difficult thing to say it should never have

:08:17.:08:21.

been done and it is likely to collapse. I would like to save the

:08:21.:08:26.

euro. But I don't think Greece and the euro is a reasonable

:08:26.:08:28.

proposition. Giorgos Papakonstantinou, why is leaving

:08:28.:08:33.

the euro a bad idea from the Greek perspective? Well, first of all,

:08:33.:08:38.

can I take issue with your bad kebab analogy, which I find

:08:38.:08:41.

offensive. The Greek economy is in a crisis s the Greek people are

:08:41.:08:46.

going through a lot, they deserve some respect. I really didn't find

:08:46.:08:51.

that very appropriate. Coming to your question, leaving the euro

:08:51.:08:56.

would lead to reduction with a GDP falling by over 20%. It would

:08:56.:09:01.

double today's extremely high unemployment from 20% to over up to

:09:01.:09:06.

40%. It would lead to a halving of living standards, and to widespread

:09:06.:09:10.

poverty. Today's situation is very difficult and very bad, but leaving

:09:10.:09:15.

the euro would lead the economy back to the 50s and 60s, that is

:09:15.:09:20.

not something they would want to live through. I would support that,

:09:20.:09:23.

that was quite inappropriate to say the Greeks have done something

:09:23.:09:27.

terribly wrong, they made errors, but the trouble, the reason, it is

:09:27.:09:31.

going to be awful, if Greece exits. It will be awful in the short run.

:09:31.:09:34.

The trouble is the situation for Greece is hopeless, and I mean that

:09:34.:09:40.

in a quite literal sense. Under the euro, there is nothing on the

:09:40.:09:45.

horizon to suggest any recovery, ever. We are looking at extremely

:09:45.:09:48.

high unemployment, being shut out of the capital markets, as far as

:09:48.:09:52.

the eye can see. While an exit would be terrible, there would be,

:09:52.:09:56.

you can see how a recovery could happen afterwards. I understand

:09:56.:10:00.

that nobody wants to bite that bullet. Nobody wants to take that

:10:00.:10:04.

decision. Which is why I think it is actually that the decision will

:10:04.:10:10.

be take be out -- taken out of the hands of the politicians. If anyone

:10:10.:10:16.

can give me any story where Greece returns to prosperity or a halfway

:10:16.:10:19.

acceptable situation staying within the euro, I would be happy to

:10:19.:10:23.

reconsider, I haven't seen that story. Can you imagine such a story,

:10:23.:10:27.

Giorgos Papakonstantinou? I do, I deliver here with Paul, I think

:10:27.:10:30.

that clearly we need much more time than what the current programme

:10:30.:10:34.

gives us, to put the finances in order. But we are very close to

:10:34.:10:38.

running a primary surplus. The main problem is the economy isn't

:10:38.:10:41.

growing, and the economy isn't growing, it wasn't growing before

:10:41.:10:46.

the bail out. We were actually in recession since 2008. Before we

:10:46.:10:50.

started the austerity package. Clearly the austerity package has

:10:50.:10:54.

made things much worse. We need growth. Growth needs to come with

:10:54.:10:57.

the help of our European partners, through some kind of a growth

:10:57.:11:02.

package. With confidence returning and investment flowing back in. We

:11:02.:11:05.

have a privatisation programme, which should attract foreign

:11:05.:11:09.

investment. For all this to work you have to have a stablised

:11:09.:11:12.

situation, at the moment Europe is not giving the right signals. There

:11:12.:11:17.

has been some progress in improving the institutional architecture, but

:11:17.:11:22.

not enough. And the big moves have not been made yet. I'm hopeful that

:11:22.:11:26.

there is a wind of change in Europe at the moment, following also the

:11:27.:11:32.

French election, which will change the emphasis away from exclusively

:11:32.:11:38.

looking at austerity, and balancing it more with growth, and having the

:11:38.:11:42.

banks being able to bring the liquidity into the system. At the

:11:42.:11:46.

moment you have both the demand not being there, because wages and

:11:46.:11:52.

salaries have been cut, and a banking system not funking, which

:11:52.:12:00.

doesn't provide working cap -- functioning which doesn't provide

:12:00.:12:03.

working capital. How close are things to not working there?

:12:03.:12:07.

have had a fragmented result, from an election, and we have an

:12:07.:12:11.

election where the result is hanging in the air. The polls at

:12:11.:12:19.

the moment give the Conservatives and the left parties pretty much

:12:19.:12:26.

equal results. So it is touch and go, where this will go, it is clear

:12:26.:12:29.

the problems are too big for one party to shoulder this. We tried

:12:29.:12:34.

this for two years, we had an absolute majority in parliament and

:12:34.:12:40.

we failed. That is the point, my sense is, in fact, the coalition in

:12:40.:12:44.

Greece was doing all of the things it was asked to do. The trouble is

:12:44.:12:48.

that was not producing growth. That nothing plausibly on the horizon

:12:48.:12:54.

will produce growth. Even if the sternness of European austerity

:12:54.:12:59.

demanded is lessened a bit, that will not provide growth. Greece is

:12:59.:13:03.

highly uncompetitive in growth, the idea that you can close those

:13:03.:13:06.

structural reforms in any time frame is unreasonable. Some of us

:13:06.:13:11.

cut our teeth in way on the Argentine crisis more than a decade

:13:11.:13:16.

ago. It was, in some ways, easier, because they had their own currency.

:13:16.:13:20.

It was the same thing, there was no plausible route back to an

:13:20.:13:23.

acceptable economic situation, except via devaluation. I think

:13:23.:13:28.

that's going to be the case here. We just don't see how this can ever

:13:28.:13:33.

be reinvolved, otherwise. Remember, however, in the last two years, we

:13:33.:13:38.

clawed back the competition that was lost, in unit labour costs,

:13:38.:13:43.

since the starting of the eurozone. Greece has some existing advantages,

:13:43.:13:51.

like tourism and shipping, and some new ones like renewables, logistics.

:13:51.:13:55.

It does have the natural resources, the people, the ideas, to move

:13:55.:13:59.

forward. But it costs you power? keep the engine growing.

:14:00.:14:04.

eventually you lost power? We did. I actually take the same view, I

:14:04.:14:08.

think there is a lot of fundamental strengths, which are reasons why

:14:08.:14:14.

Greece, after an exit might recover much more quickly than people think.

:14:14.:14:17.

But the notion that the exports, essentially it will require exports,

:14:17.:14:21.

one way or another, the notion that the exports will come on stream,

:14:21.:14:27.

fast enough, with no, under the current regime, to avoid what is an

:14:27.:14:33.

on going catastrophy becoming unmanageable. I hope and would love

:14:33.:14:37.

to believe you are right. This is a horrible situation, it is a trap,

:14:37.:14:41.

and not the fault of the Greeks for the most part. But, my God, how

:14:41.:14:45.

much longer can this last, the action forcing the event will, of

:14:45.:14:50.

course, be people pulling money out of Greek banks. The ECB has to

:14:50.:14:54.

offer either unlimited credit, with no security, or pull the plug.

:14:54.:14:58.

Maybe they will do that, maybe they will string it on for another year.

:14:58.:15:04.

I find it hard to believe. You are geting any signs in Athens of

:15:04.:15:10.

concessions about to be made to you? I think it is clear that the

:15:10.:15:14.

troika is realising, also partly as a result of the election result,

:15:14.:15:19.

but partly also, looking at the fundamentals of the economy, that

:15:19.:15:23.

something has to give. If you ask any economist they will tell you

:15:23.:15:28.

that the fiscal path we have been following is extreme. We reduced

:15:28.:15:33.

the primary deficit by eight percentage points in two years.

:15:33.:15:36.

That has never been done before. To continue on this path, without

:15:36.:15:42.

giving it some slack, makes no sense. The more you hit on the

:15:42.:15:45.

fiscal side, the more difficult structural reforms become. Because

:15:45.:15:54.

the society is in such a difficult situation it is very hard to get

:15:54.:15:59.

acceptance around necessary reforms, but reforms always have people who

:15:59.:16:06.

oppose them. You do need, and the troika is ready to give, and the

:16:06.:16:11.

European partners, thinking of Germany, because it comes down to

:16:11.:16:15.

that, certainly some leeway of the base on the fiscal side. And

:16:15.:16:16.

hopefully on some other issues as well.

:16:17.:16:20.

Thank you very much. Only a fool would predict precisely how this

:16:20.:16:25.

crisis will end, but Greece is far from the end of the story. The

:16:25.:16:28.

interest the Spanish Government has to pay to borrow money reached

:16:28.:16:32.

record levels today, because so many people who ought to know,

:16:32.:16:37.

seriously doubt whether it has the wherewithal to keep the country's

:16:37.:16:42.

banks afloat. Spain, the fourth- biggest economy in the eurozone,

:16:42.:16:45.

threatens the entire edifice, it is not about individual countries but

:16:45.:16:52.

whether the euro itself can be rescued.

:16:52.:16:56.

Imagine this, it is six months on from the Greek exit, it has been

:16:56.:17:01.

orderly, negotiated, there has been no euro crash. But on the housing

:17:01.:17:07.

estates of peripheral Europe, things are very bleak.

:17:07.:17:12.

I think six months after a Greek exit we would still be in a period

:17:12.:17:15.

of economic and financial uncertainty and weakness. Our

:17:15.:17:19.

expectation is that the economy would contract, fairly sharply, we

:17:19.:17:23.

would expect the eurozone GDP to drop something like 5%, on a par

:17:23.:17:27.

what we saw during the global recession of a couple of years ago.

:17:27.:17:30.

If all that looks bleak, it is possibly the best you could hope

:17:30.:17:34.

for if Greece exits, because a disorderly exit could, six months

:17:34.:17:42.

down the line, pose severe threats to the entire europroject. The

:17:42.:17:46.

biggest systemic risk is Spain, its economy is shrinking now, its

:17:46.:17:51.

sovereign debt already verging on unmanageable, its banking sector

:17:51.:17:56.

sitting on a mountain of bad debt that nobody wants to calculate.

:17:56.:18:04.

think there is a serious chance that the eurozone could break up.

:18:04.:18:12.

There are adverse economic factors on going. There are crippling high

:18:12.:18:17.

levels of debt and problems, one has to fear the exit process of a

:18:17.:18:22.

country like Spain, would effectively sound the death knell

:18:22.:18:27.

for the euro all together. Until now Germany insistence on austerity

:18:27.:18:32.

for Greece has been seen as a giant bluff. But if it does drive Europe

:18:32.:18:36.

to ruination, even stalwarts of the political centre, now see that as

:18:36.:18:41.

changing the debate over austerity versus growth. It may be that the

:18:41.:18:43.

approach of the Washington consensus, and George Osborne and

:18:43.:18:47.

Cameron, is simply wrong, and that Greece is one of the first people,

:18:47.:18:51.

because they have absolutely nothing to lose. The first groups

:18:51.:18:55.

of people putting their head above and saying, no, we are not

:18:55.:19:04.

accepting this. I think it might be totemic, for how the whole

:19:04.:19:07.

austerity project is seen. Economists find it hard to model

:19:07.:19:10.

what is coming. At least they are thinking about it. The problem is,

:19:10.:19:14.

for the centrist politicians and civil servants who run Europe, they

:19:14.:19:17.

don't even want to think about it. When you look at what is happening

:19:17.:19:21.

in Greece, on the streets, you can see why. The old split between left

:19:21.:19:27.

and right is still there underneath. It still simers, there is still a

:19:27.:19:32.

sense of families and political history. Your grandfather killed my

:19:32.:19:36.

grandfather, that could come back? Your grandfather killed my

:19:36.:19:44.

grandfather, it is already coming back. The political goss are from a

:19:45.:19:52.

past Greece thought it had put behind it. If it fails there is no

:19:52.:20:02.

shortage of specters to haunt Europe. Paul Krugman is still with

:20:02.:20:07.

us, with a similar enlike peedic knowledge of euroaffairs, we have

:20:07.:20:12.

Kenneth Rogoff in Washington. What is the problem here, is it one of

:20:12.:20:22.

demand for debt? Well, I think that fundamental problems is a huge

:20:22.:20:26.

overhang of doubt you have to deal with. You can't deal with it

:20:26.:20:29.

watching the periphery countries of Europe being in recession for ten

:20:29.:20:33.

years. That is not going to happen. There has to come a plan to bring

:20:33.:20:38.

the debt down. Growth is a piece of it. They need to write down debt

:20:38.:20:43.

and need inflation. They need plan for restoring competitiveness in

:20:43.:20:46.

the periphery. If they are not going to have their own currency,

:20:46.:20:52.

then the euro needs to go down. way I think about Spain, is for ten

:20:52.:20:58.

years they were seen as the golden boy of Europe, now it is safe

:20:58.:21:03.

because it is part of the eurozone, money flooded in. A lot of it the

:21:03.:21:07.

Germany banks lending to Spanish banks, which fuelled a huge housing

:21:07.:21:12.

bubble. A lot of inflation, they get uncompetitive, the bubble

:21:12.:21:15.

bursts, how do they get back to being competitive again? The

:21:15.:21:19.

current strategy is that they should cut their wages, and some

:21:19.:21:23.

how do enough austerity to pay that debt. It is impossible. The demands

:21:23.:21:29.

being placed on Spain are impossible. If Greece exits, then

:21:29.:21:32.

everybody says it is impossible, money starts flooding out of Spain

:21:32.:21:37.

and Europe has a choice. And the choice is? The choice is, Ken and I

:21:37.:21:42.

seem to agree, that credit has to be made available, open-ended

:21:42.:21:48.

lending, so when people pull their euros out the banks don't collapse.

:21:48.:21:58.

An unlimited supply of euros from frack further. More debt? It is

:21:58.:22:01.

temporary, because if the panic stops the money comes back. You

:22:01.:22:05.

have to have inflation in Europe, instead of Spain having to cut its

:22:05.:22:10.

wages, at least it is not solely through cuts of Spanish wages, but

:22:10.:22:16.

we will have rising German wages, which is an easier way for Spain to

:22:16.:22:20.

become competitive. It is a change in the vision of Germany policy.

:22:20.:22:24.

Instead of punishing the debtors and having price stability, they

:22:24.:22:29.

have to have something more liberal, they have to have a party.

:22:29.:22:35.

Rogoff, inflation and more debt, is that a solution? No, I don't agree

:22:35.:22:42.

with the more debt. I certainly agree about writing down debt. I

:22:42.:22:45.

think inflation is a piece of the solution, all over the world. I

:22:45.:22:49.

don't think there is really way to go forward here without having some

:22:49.:22:52.

political union, or vision of political union. I don't think this

:22:52.:22:56.

is all about Germany being stingy. It is also about not wanting to

:22:56.:23:03.

have -- st, ing ey it is also about not wanting to have an open bar for

:23:03.:23:09.

the rest of Europe. I'm not saying what they are proposing is

:23:09.:23:12.

necessarily nearly the end of things. I really think the only way

:23:12.:23:16.

this is going to end is either Europe starts to look like a real

:23:16.:23:23.

country, and I mean France and Germany, part of the same country,

:23:23.:23:28.

central Government with a lot of taxing power, or it splits up.

:23:28.:23:33.

Unless they start moving that way enthusiastically soon, I don't

:23:33.:23:38.

think anything will stablise the situation. I hope's wrong about

:23:38.:23:44.

that, if he's right it will be over. I have done Ireland versus Nevada,

:23:44.:23:48.

not the landscape, but everything else looks remarkably similar.

:23:48.:23:54.

Because the way the US fiscal system exists, Nevada is receiving

:23:54.:23:59.

de facto aid on the scale of 5-6% of GDP, from Washington. Try to

:23:59.:24:02.

imagine that Europe, that Germany would be willing to countenance a

:24:02.:24:09.

system where 5-6% of GDP, not in loans, but actual aid, is given to

:24:09.:24:12.

southern European countries at the moment, that is not conceivable.

:24:12.:24:16.

That is a generation's work. We don't have a generation, we may not

:24:16.:24:22.

have more than a few months here. By that analysis, the euro has had

:24:22.:24:29.

it? Some doubt write downs, that some default, plus some inflation,

:24:29.:24:36.

might make it, might make it manage gt, over a five-year d manageable,

:24:36.:24:40.

over a five-year period to get an adjustment. That is not good, the

:24:40.:24:43.

solution that the United States of Europe is much to be desired.

:24:43.:24:46.

it won't happen during my working lifetime.

:24:47.:24:51.

Ken Rogoff, you tried to get in? think that will be a problem. I

:24:51.:24:56.

think they need to lay out a vision, it could be 15-20 years, right now

:24:56.:25:00.

it is a moving 40-50 years. But they need to lay out a vision where

:25:00.:25:05.

it is going forward, not backward. I think the French election was in

:25:05.:25:09.

some sense a rejection of moving to a closer Europe, a rejection of

:25:09.:25:15.

having more interdependance. I certainly see that Germany, one way

:25:15.:25:19.

or another, is not going to get paid. Either because there is going

:25:19.:25:24.

to be default, inflation or it will make transfers t has to pick its

:25:24.:25:28.

poison. I'm very sympathetic to their wanting rules, at least

:25:28.:25:32.

trying to negotiate. That said, they may find themselves blinking

:25:33.:25:36.

again and again, simply because they are being gamed into making

:25:37.:25:41.

the big payments and transfers, because it is so catastrophic what

:25:41.:25:45.

will happen if they don't. What should western Governments be doing

:25:45.:25:55.
:25:55.:25:58.

now? They have to stop the panic here. That is the number one

:25:58.:26:02.

problem. I think over the longer term there is a huge overhang of

:26:02.:26:07.

debt, public, private, external debt, that gradually needs to be

:26:07.:26:13.

deflated out of the of the system. Some through growth, there are very

:26:13.:26:17.

few historical experiences where that has been very successful.

:26:17.:26:20.

Except in cases like Canada and Sweden, where the Governments were

:26:20.:26:23.

very large, and they were able to shrink them and make the economies

:26:23.:26:31.

much more efficient. I look at the European situation, as something

:26:31.:26:34.

impossible will happen. One that the euro will be allowed to

:26:34.:26:37.

collapse, that is unthinkable, impossible. The other is the

:26:37.:26:41.

Germans will accept lots of debt relief, plus inflation, plus

:26:41.:26:45.

temporarily large open-ended lending, which is impossible. One

:26:45.:26:49.

of those two impossible things will happen. It is an awesome choice. It

:26:49.:26:53.

is not something, they will not have years to dither over this,

:26:53.:26:57.

they have months to dither over this. It is moving very fast.

:26:57.:27:01.

Rather surprisingly a survey out tomorrow, of how confident British

:27:01.:27:04.

consumers feel, will show their slightly less gloomy than they were.

:27:04.:27:07.

But the facts about the state of the economy in this country, even

:27:07.:27:10.

without the collapse of the eurozone, are awful. The

:27:10.:27:16.

Chancellor's sticking to his line that there is no alternative to his

:27:16.:27:22.

austerity prescription. Not for him, the great economist, John Maynard

:27:22.:27:26.

Keynes, said when the facts change I change my mind, what do you do.

:27:26.:27:36.
:27:36.:27:37.

First let's have this. "To understand my state of mind",

:27:37.:27:42.

John Maynard Keynes wrote to his friend, George Bernard show, he

:27:42.:27:47.

said he would be writing a book on economic theory, that would largely

:27:47.:27:51.

revolutionise, not at once, but in the course of next ten years, the

:27:51.:27:54.

way the world thinks about economic problems. It was a bit of a brag,

:27:54.:28:00.

even to a friend, but as it turns out, even he was underplaying it.

:28:00.:28:05.

Keynes ideas are still in play, nearly 70 years later. In the

:28:05.:28:09.

summer of 2010, the Chancellor, George Osborne put in place his own

:28:10.:28:13.

theory. Massive spending cuts, driven by a need to placate the

:28:13.:28:18.

international bond markets. This Emergency Budget deals decisively

:28:18.:28:23.

with our country's record debts. It pays for the past and plans for the

:28:23.:28:29.

future. His opposite number, retaliated. With a modern day case

:28:29.:28:35.

for Keynesian spending. coalition should act quickly and

:28:35.:28:40.

decisively to reverse George Osborne's cuts and for household

:28:40.:28:45.

budgets this year. We should reinstate vital investment for jobs

:28:45.:28:51.

now. Here on the corner of John Maynard Keynes's street, is a

:28:51.:28:56.

building site that exsemplifies his ideas of yesterday, he believes if

:28:57.:29:00.

the economy isn't involved in the private sector, the Government has

:29:00.:29:03.

no choice, the Government has to intervene. He said, tongue in cheek,

:29:03.:29:10.

what you should do, is take bottles, and fill them with pound coins, and

:29:10.:29:14.

put them at the bottom of the large well and put it down there. The

:29:14.:29:19.

employment of getting the bags out would stimulate the economy. That

:29:19.:29:24.

is where critics of the Government say we are now. On the one hand you

:29:24.:29:28.

have �700 billion of public sector private assets that they don't want

:29:28.:29:32.

to spend. And there is historic low rates of borrowing that the

:29:32.:29:35.

Government enjoys and could be better used to stimulate the

:29:36.:29:42.

economy. That is what they think should be done and they are still

:29:42.:29:45.

Keynesian followers. The Government could actually restore some of its

:29:45.:29:47.

capital programmes that have been cut. For example, the school

:29:47.:29:51.

building programme has been cut by 80%. I think much of those cuts

:29:51.:29:57.

should be reversed. There are other programmes which would be better to

:29:57.:30:00.

be done by a national investment bank. Because that would get a lot

:30:00.:30:02.

of the spending off the Government's balance sheet, if

:30:03.:30:08.

people are worried that the Government is being profligate.

:30:08.:30:12.

Critics of neo-Keynesian sound warnings. They point out our

:30:13.:30:20.

economy has generous automatic fiscal monitor, spending rising.

:30:20.:30:23.

They say the Government is borrowing a fair amount, not much

:30:23.:30:26.

less than a Labour Government would have done. The Government is

:30:26.:30:32.

spending close to 50% of GDP, their plan is to get down to to 40% over

:30:33.:30:37.

the next couple of years. If they want to provide confidence in the

:30:37.:30:42.

economy, what they need to be doing is getting close to 30%. That would

:30:42.:30:45.

also allow tax cuts, that would encourage private investment.

:30:46.:30:49.

are many reasons why the Government doesn't think the time is right for

:30:49.:30:52.

apartheid of pronounced Keynesian spending. But there are two that

:30:52.:30:56.

stand out. The first one, according to the ideas of the man himself,

:30:56.:31:00.

you don't run a deficit during a time of economic boom. The current

:31:00.:31:03.

Government believe that is exactly what the previous Government did,

:31:03.:31:09.

and they are now dealing with the effects of it. There is also

:31:09.:31:12.

unfunded pension liabilities, that this Government is also trying to

:31:12.:31:16.

deal with. They believed Keynes didn't have them at the time of his

:31:16.:31:19.

writing, and you can't keep kicking a debt can down the road.

:31:19.:31:24.

Nonetheless, the Government is due to launch new programmes of

:31:24.:31:28.

infrastructure investment soon. The debate is shifting towards a

:31:28.:31:32.

different Keynesian insight, that monetary policy could do more heavy

:31:32.:31:42.
:31:42.:31:43.

lifting. The Bank of England should set nominal GDP rates, musing from

:31:43.:31:46.

the builders until then, they wonder where he buried the pound

:31:46.:31:52.

coins. Paul Krugman is here, Jon Moulton

:31:53.:31:56.

joins him, and Andrea Leadsom, a Conservative MP, who previously

:31:56.:32:01.

worked in finance for 20 years. You have given George Osborne quite

:32:01.:32:05.

a lot of ear ache about his handle of the economy. Have you seen

:32:05.:32:08.

anything while you have been over - - handling of the economy, have you

:32:08.:32:11.

seen anything while you have been over here to change your view?

:32:11.:32:15.

have had two years of austerity here and elsewhere. What we have

:32:15.:32:18.

seen, first of all, is austerity really does contract the economy.

:32:18.:32:22.

That the notion that it would inspire business confidence, and

:32:22.:32:29.

lead to expansion, not contraction, has been decisively proved wrong

:32:29.:32:34.

here and across the continent. Secondly, there is growing evidence

:32:34.:32:38.

that austerity, in these conditions, doesn't even work in fiscal terms.

:32:38.:32:42.

Because it shrinks the economy now and also shrinks the economy in

:32:42.:32:47.

future. It hurts the economy's long-run potential, which reduces

:32:47.:32:51.

future revenues, which worsens the long run budget position. I have

:32:51.:32:55.

used the analogy, it is like medieval doctors that thought you

:32:55.:32:59.

could treat a sick patient by bleeding, the patient got sicker

:32:59.:33:02.

and they said, bleed more. That is what is happening. You have a debt

:33:02.:33:08.

problem that is real, and the treatment is making things worse,

:33:08.:33:13.

even in fiscal terms. Why are you shaking your head, this is a Nobel

:33:13.:33:18.

Prize-winning economist? I find his view reckless, frankly, I can't

:33:18.:33:21.

believe that somebody as incredibly highly regarded could honestly

:33:21.:33:26.

think that the answer is to go and borrow more money. It is very

:33:27.:33:30.

simple mathematics, if you are in a hole, if you have overspent and

:33:30.:33:35.

overspent, spending more is simply not going to help. It will make

:33:35.:33:40.

things worse. You talk about austerity, in reality this is

:33:40.:33:44.

austerity light. If you really wanted to sort the economy, they

:33:44.:33:49.

would be doing it far faster with a shorter, sharper hit to get us

:33:49.:33:54.

rebounding sooner than we can. There are a lot of ways to answer

:33:54.:33:57.

that. The main thing to say, if you try to have a situation that

:33:57.:34:00.

everyone is trying to slash at the same time, which the private sector

:34:00.:34:04.

is trying to slash spending cuts, it feels it has too much debt, and

:34:04.:34:08.

the Government is also saying we have too much debt, we are all

:34:08.:34:11.

trying to slash. Then we run up against the fundamental fact that

:34:11.:34:15.

we are not a household, but an economy. And your spending is my

:34:15.:34:19.

income, and my spending is my income. And if we are both doing

:34:19.:34:23.

the slashing at the same time, what we end up doing is producing a

:34:23.:34:30.

depression that leaves us worse off. This is another thing, 1930s

:34:30.:34:39.

American economist, Irvine Fisher, Keynes plentor, he said if

:34:39.:34:43.

everybody tries to pay down debt, the more people save and the more

:34:43.:34:48.

they owe. We are worsening the debt problem by not allowing the

:34:48.:34:57.

Government to be the stablising factor. Even I struggle to attack a

:34:57.:35:02.

Nobel Prize winner, but I think you are seriously wrong. The issue

:35:02.:35:06.

about austerity is we have too large a state. We have let the

:35:06.:35:11.

economy go from 30 % odd, to pushing 50%, public sector. If you

:35:11.:35:16.

want growth you need a larger private sector, not a larger public

:35:16.:35:20.

sector. You are also ignoring, as your book does, I have just been

:35:20.:35:24.

reading it, waiting to come on, the very simple moral dimension of what

:35:24.:35:29.

you are recommending. That is we run up more debt. The only thing

:35:29.:35:33.

that debt does, it enables us to live better today, at the expense

:35:33.:35:38.

of those who follow us. That is a serious moral argument, and you

:35:38.:35:43.

cannot ignore it. I would put the moral argument in a different way,

:35:43.:35:47.

if I think about the future generation, the crime we are

:35:47.:35:49.

committing against the next generation, is not that we will

:35:49.:35:55.

leave them with more debt. That is a venal sin, the crime is all the

:35:55.:35:59.

students are graduating from college with no job prospects.

:35:59.:36:03.

Graduating with debts they have incurred to get an expensive

:36:03.:36:05.

education, and then there is no jobs. The damage we are inflicting

:36:05.:36:09.

on the next generation, by not having jobs for them. Which is the

:36:09.:36:14.

result of misguided austerity right now. That is the great sin. Those

:36:14.:36:18.

jobs will be generated when people move from the public sector to the

:36:18.:36:22.

private sector. What we need to be doing, is really making it easier

:36:22.:36:27.

for young people to start their own businesses, making it far easier

:36:27.:36:32.

for new entrepeneurs, you say we have to create jobs. We shouldn't

:36:32.:36:36.

be about creating jobs, but about enabling the economy to create jobs,

:36:36.:36:39.

low tax regimes, and opportunities for people to start up new

:36:39.:36:43.

businesses and so on. The average young person is not going to start

:36:44.:36:47.

a business. Why not? There has to be an expanding economy which is

:36:47.:36:50.

not happening, it is not happening because we are not providing the

:36:50.:36:54.

necessary support. By the way, I think you have just given me

:36:54.:36:57.

confirmation that something people like me tend to say. Actually none

:36:57.:37:01.

of this is at all about fiscal responsibility. It is about

:37:01.:37:05.

exploiting the current situation to pursue an ideolgical goal of a

:37:05.:37:08.

smaller state. You know, we can argue about whether the British

:37:08.:37:13.

state is too large, but look at Sweden. Which is weathering it very

:37:13.:37:17.

well, with a much larger state than you have. That is a great diversion,

:37:17.:37:21.

that is suggesting it is not sincere, it is not the budget

:37:21.:37:24.

deficit that is concern you, you are looking for a way to exploit

:37:24.:37:32.

the deficit situation. You accuse - - we accuse you of being wrong, and

:37:32.:37:37.

you accuse us of lying. You are mingling concepts that are separate.

:37:37.:37:40.

There is clear economic evidence, and you must accept as evidence,

:37:40.:37:45.

not they are hey, that, on average, larger public sectors grow slower

:37:45.:37:51.

than smaller ones. I don't accept that at all, we could have that

:37:51.:37:54.

discussion but we need equation charts for that. That is not true.

:37:54.:38:01.

So Mr Alfonso's study is rubbish. The question of size of the state,

:38:01.:38:05.

and the question of what one should be doing right now it deal with

:38:05.:38:08.

this crisis, ought to be separate. Surely there has to be a point that

:38:09.:38:13.

you can either expand your private sector, by making it easier for the

:38:13.:38:16.

private sector to expand. Or you can expand your public sec to and

:38:16.:38:20.

the only way to do that, is by removing wealth from the private

:38:20.:38:26.

sector, to put into the public sector. You are missing a point of

:38:26.:38:30.

what it means to be in a depression. We are not going into a depression.

:38:30.:38:33.

We are in a depression, there are vast numbers of workers idle who

:38:33.:38:37.

want to work. There is vast amounts of capital going nowhere, because

:38:37.:38:41.

there is no demand. At this point of time, the private and public

:38:41.:38:44.

sector are not competing for resources, there are unemployed

:38:44.:38:48.

resources, the point is to put them to work. Give me a recovery, in the

:38:48.:38:57.

UK or US, and I will become a fiscal, be happy to find ways to

:38:57.:39:00.

discuss about Government spending and raising revenue, in the US that

:39:00.:39:05.

needs to be part of the solution. Not now, not under these conditions.

:39:05.:39:09.

Don't you think efforts to reduce corporation tax, to deregulate, to

:39:09.:39:15.

make it ease your to start new companies, to -- easier to start

:39:15.:39:20.

new companies, and make it easier for banks to lend. To improve the

:39:20.:39:23.

private sector of the economy, that will have more impact than

:39:23.:39:27.

borrowing more money to create jobs and throw money at things. We have

:39:27.:39:31.

survey evidence in the United States about what it is that is

:39:31.:39:34.

holding private businesses back. Overwhelmingably the answer is lack

:39:34.:39:38.

of sales. There is not enough demand. Constraints on capital is

:39:38.:39:43.

not an issue. They would like to have more skilled workers, no more

:39:43.:39:47.

so than usual. Issues about financing are small issues,

:39:47.:39:51.

concerns about future Government regulation, they always complain

:39:51.:39:54.

about that, no more than usual. What has changed is there is no

:39:54.:40:00.

demand, there is no market there. That is what the austerity policies

:40:00.:40:04.

are worse, they are inhibiting the private sector as well as the

:40:04.:40:11.

public. Not all of the policies have failed. Every success story

:40:11.:40:14.

includes either high interest rates to start with, so you could bring

:40:14.:40:18.

them down. Or a situation where you have a large currency devaluation,

:40:18.:40:23.

that won't work now, you have to have some prosperous economy to

:40:23.:40:26.

devalue against, there is nobody out there now. There is, a clear

:40:26.:40:30.

example, Estonia. It doesn't fit the story at all. I don't think we

:40:30.:40:33.

have the evidence on the Estonia example, and we haven't time to go

:40:33.:40:36.

into it. I would love to. Come back and tell

:40:36.:40:40.

us all about it. The people of Ireland get to vote

:40:40.:40:43.

tomorrow on whether to swallow the medicine prescribed by Europe, it

:40:43.:40:46.

is a quirk of the institution constitution that it requires a

:40:46.:40:49.

referendum for the country to decide whether to accept a treaty

:40:49.:40:53.

that most of the rest of the eurozone has already agreed to. The

:40:53.:40:57.

Irish have a habit of rejecting EU treaties in referendums, and then

:40:57.:41:00.

accepting them when they are told to come up with the right

:41:00.:41:09.

conclusion. It was a Drome house, which turned into a nightmare

:41:09.:41:14.

mansion. Vacant and abandoned, after its owners' fortunes went the

:41:14.:41:20.

same way as the once booming island. Julia still work, but can't afford

:41:20.:41:25.

the mortgage any more, she survives by selling her furniture, and votes

:41:25.:41:28.

no in the referendum. This country is in a mess, because of the lack

:41:28.:41:31.

of regulation and the banks throwing money at people. Nobody is

:41:31.:41:35.

taking responsibility at the top, people like myself I lose my entire

:41:35.:41:38.

life earnings, and people in more dire situations, who are struggling

:41:38.:41:42.

to put food on the table. They are paying the penalty, the people at

:41:42.:41:46.

the top are being protected. That is wrong. Many of Ireland's middle-

:41:46.:41:50.

classes feel the same way, most of those voting no come from the less

:41:50.:41:54.

well off strands of society. People have seen their standards of living

:41:54.:41:59.

squeezed. And Sinn Fein, with less than 10% of the seats in Irish

:41:59.:42:04.

parliament, have stopped into that anger by urging a no vote.

:42:04.:42:09.

biggest thing the no vote would do, is to send clearly a signal to our

:42:09.:42:12.

own Government, but then to our European partner, that it is the

:42:12.:42:17.

considered view of the Irish people that austerity has failed. It is

:42:17.:42:20.

therefore the responsibility of democratically elected Governments

:42:20.:42:26.

and politicians, to come up with the Plan B. The yes side is

:42:26.:42:29.

represented by the vast majority of political parties in Ireland, they

:42:29.:42:33.

are warning voters if the Fiscal Compact is reject, Ireland might

:42:33.:42:38.

not be able to get a second bail out in 2014, if one was required.

:42:39.:42:42.

It is a tough sell, in any circumstance, where you have high

:42:42.:42:47.

levels of unemployment, and people are hurting. Aren't they voting yes,

:42:47.:42:49.

because they are afraid, rather than because this is the right

:42:49.:42:53.

thing, the right forward path? think they are voting yes because

:42:53.:42:56.

they want an insurance policy of funding there, if we cannot get

:42:56.:43:00.

back to the markets. They are voting yes because they want proper

:43:00.:43:04.

fiscal discipline, they don't want to go through the boom to bust

:43:04.:43:07.

nonsense we have seen over the course of the last number of years.

:43:07.:43:12.

They want certainty with this treaty. This treaty provides that.

:43:12.:43:16.

Dublin's Docklands symbolises the boom and bust that was the Celtic

:43:16.:43:20.

Tiger era. The bridges, banks, hotels that shot up in the last few

:43:20.:43:24.

years, showed aspiration and growth, it all ended badly, symbolised in

:43:24.:43:29.

the building over my shoulder, which would have been Anglo-Irish

:43:29.:43:34.

bank's head quarter, before it collapsed and taking with it --

:43:34.:43:38.

headquarters, before it collapsed and took the economy with it.

:43:38.:43:44.

House buying is non-existent, but the Irish export system is booming,

:43:44.:43:49.

with niches in pharmaceuticals and technology. This man runs one of

:43:49.:43:55.

the biggest exporters in Ireland. If we can manage our way through

:43:55.:44:00.

the next two years, combine that with certainty coming out of Europe,

:44:00.:44:04.

which will trigger economic growth and economic activity. Then I think

:44:05.:44:09.

you will see a very different Ireland. And that is why we have to

:44:09.:44:14.

vote yes tomorrow. We're not voting for tomorrow, we are voting for the

:44:14.:44:18.

Ireland of two years from now. We're voting for the Ireland of 40

:44:18.:44:22.

years, for our grandchildren. But Ireland's young people may not

:44:22.:44:27.

be able to wait a few years, they are already emigrating at a rate of

:44:27.:44:30.

1,000 a week, not all have lost their sense of humour. You find it

:44:30.:44:35.

interesting, you guys have seen the protests and the indignation in

:44:35.:44:38.

Spain, the people of Greece taking to the streets and burning down

:44:39.:44:43.

Athens. Part of you thinks, why doesn't it happen in Ireland, and

:44:43.:44:48.

you think, we just don't have the weather for it. I'm not paying any

:44:48.:44:51.

debt, people say that is irresponsible, what would happen if

:44:51.:44:55.

everybody stopped paying their debt? We would be debt-free.

:44:55.:44:58.

I decided to do my own little stand-up, afterall, how difficult

:44:58.:45:02.

with it be? The reason we are here is because we are looking at the

:45:02.:45:07.

treaty. And I was hoping to canvas your views, because unlike so many

:45:07.:45:14.

of your peers, you haven't emigrated, yet. So all of you, how

:45:14.:45:20.

many are "don't know", you will vote in the next 48 hours and you

:45:20.:45:26.

still don't know. Can I ask someone why you don't no. Did you raise

:45:26.:45:31.

your hand? Who raised their hand and said they did know. Why don't

:45:31.:45:37.

you know? No pressure? I haven't really looked into it. Despite the

:45:37.:45:41.

gallows humour, and the high number of undecided vote erts, even at

:45:41.:45:46.

this late stage, both sides of the debate agree that Ireland faces a

:45:46.:45:49.

few more years of austerity, irrespective of the outcome.

:45:49.:45:53.

Allegra Stratton is back with us to tell us what has happened with the

:45:53.:45:56.

Prime Minister's former head of propaganda, Andy Coulson. What was

:45:56.:46:04.

his former title? Head of Communications. He has been

:46:04.:46:09.

arrested? Before we went on air, he was charged and arrested. He was

:46:09.:46:14.

detained at 6frplt30am in his home in south London in Dulwich, they

:46:14.:46:19.

drove him, not train nor plane, they drove him to Glasgow, arrived

:46:19.:46:24.

at 3.30, six hours of questioning, then announced they were charging

:46:24.:46:27.

and arresting. It is down to the Scottish authorities to figure out

:46:27.:46:32.

what they will do next. offences? Related to his appearance

:46:32.:46:38.

at a Tommy Sheridan trial. charge? Perjury. That is serious?

:46:38.:46:42.

Taken very seriously up there, more so. The problem for the Prime

:46:42.:46:48.

Minister is twofold, firstly, it is something he is alleged to have

:46:48.:46:52.

committed while working for the Prime Minister. A different

:46:52.:46:57.

category of things he is accused of. It reminds us ahead of the Jubilee

:46:57.:47:00.

weekend, that no matter how hard the Government tries to disentangle

:47:00.:47:03.

itself from News International, every time they try they get

:47:03.:47:07.

dragged back by forces beyond their control. Thank you very much. It is

:47:08.:47:11.

on most of tomorrow morning's front pages, of course, if I knew I had

:47:11.:47:15.

time to show you I would. I don't have time to show you, that is the

:47:15.:47:20.

Guardian there. He's on most of the others as well. That's all for

:47:20.:47:23.

tonight, James Bond is here tomorrow, but until then, good

:47:23.:47:33.
:47:33.:47:33.

tomorrow, but until then, good night.

:47:33.:47:37.

The heavy, thundery showers in eastern England is clearing away,

:47:37.:47:42.

only to be replaced by cloud and rain tomorrow, across the northern

:47:42.:47:45.

half of the UK. To the south it will be dryer and brighter, that is

:47:45.:47:48.

where we have the last of the warmth. The rain sets in for

:47:48.:47:51.

northern England, it will be a cool day here. A bit of raib from time

:47:51.:47:56.

to time in the Midlands, after a bright start East Anglia could see

:47:56.:48:02.

rain late in the day. Southern most parts of England, dry and bright,

:48:02.:48:05.

sunshine from time to time, here we have the last of the warmth.

:48:05.:48:09.

Temperatures 18-19, not as warm as today. South Wales doesn't look too

:48:10.:48:15.

bad, mid-and North Wales will see some rain at times, in the hills

:48:15.:48:19.

and mountains. In Northern Ireland a poor day, rain all day, some of

:48:19.:48:24.

which heavy. The rain in Scotland gets as far north as Inverness and

:48:24.:48:28.

Aberdeen. It will be heaviest late morning, early afternoon, the rain

:48:28.:48:32.

becomes lighter during the latter part of the day. A pretty poor day

:48:32.:48:36.

across many northern parts of the UK. It should be dryer and brighter

:48:36.:48:40.

for most areas on Friday. As you head further south, there is a lot

:48:40.:48:44.

Jeremy Paxman is joined by Nobel Prize winning economist Paul Krugman, Harvard economist Ken Rogoff and Greek Minister Giorgos Papakonstantinou to discuss the future for Greece, Europe and the world economy. With analysis from Paul Mason and Allegra Stratton.


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