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Tony Blair on Europe: "We've got to get policies that combine growth and reform"

Tony Blair recently met Bloomberg TV in Singapore to discuss the economy, Europe and the Scottish independence referendum.

You can watch a clip of the interview on the Bloomberg website.

INTERVIEW TRANSCRIPT

Introductory presenter: The search for the new governor of the Bank of England has begun. With a struggling UK economy and continuing risks from Europe’s debt crisis, some might even say that the job is perhaps near impossible. The former UK Prime Minister Tony Blair says the new governor faces severe challenges and Mervyn King will be a hard act to follow.

Tony Blair: The trouble is right now, not just in the UK but in the US and Europe, a huge weight is put on monetary policy and these decisions to do with quantitative easing, the level of interest rates, how you moderate issues to do with growth and inflation, I mean they are fantastically difficult. So it’s going to require a very, very qualified person technically, and also someone with smart judgement and Mervyn King I think will be a hard act to follow. I think he’s done a good job.

Interviewer: What do you think should be the priority, given the situation in Europe right now?

Tony Blair: If we can’t get growth back into the economy then it’s so much harder to do all the other things we need to do in particular the structural reforms that, not just in the Euro zone but in the UK, have to happen. On the other hand, you know, you’ve got to be careful as you go forward that you don’t end up with a problem on inflation so it’s that calibration that’s really tough. It’s a matter of judgement. I say to politicians don’t look at this as a left/right issue, look at it as a right/wrong issue. Just try and get the right judgement on it.

Interviewer: Your thoughts on Europe at this point in time. How close are we to a solution?

Tony Blair: We’ve got to get policies that combine growth and reform because these structural reforms on pensions, welfare, labour market, very difficult, they’ve got to be done – they will take some time in order to feed through into growth. In the meantime to expect countries to cut back their deficits so sharply without any prospect of growth makes it very hard for them indeed. So I think the European leaders have got to, not just resolve the liquidity issues which the European Central Bank are doing, but deal with the solvency questions particularly in relation to the banks and of course growth.

Interviewer: I want to touch on Scotland and the referendum. Your government brought in the legislation that allowed for a semi-autonomous Scottish parliament. Did you think back, in the 1990s, that that itself could lead to a referendum for full independence?

Tony Blair: Well it was always on the cards. I mean the reason we went for devolution, which allows Scotland huge amounts of freedom but within the framework of the UK, was precisely because the alternative to that was independence. Personally, I hope Scotland remains inside the UK. It’s sensible for the Scots, it’s sensible for the English and the rest of the UK.