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Gordon Brown predicts ‘very different’ response to future economic crash

UK News | Published:

The former prime minister has spoken about how he thinks the Government may respond to a future economic downturn.

Gordon Brown and economist Branko Milanovic

Gordon Brown has suggested that the Government’s response to another potential economic downturn would be “very different” from his actions during the 2008 financial crash.

Speaking at the Edinburgh International Book Festival, the former prime minister pointed to tariffs being imposed on Chinese imports to the US as an example of ways the current Government may react to another recession.

Mr Brown, who was hosting a talk by economist Branko Milanovic, responded to a question about monetary easing, a policy he pursued in the wake of the 2008 banking crisis.

Gordon Brown and economist Branko Milanovic
Former prime minister Gordon Brown before his discussion event with economist Branko Milanovic at the Edinburgh International Book Festival (Jane Barlow/PA)

Predicting a different response, Mr Brown said: “I think it’s fair to add that if there was a future financial or economic downturn, you wouldn’t just see monetary policy, you would see fiscal policy.

“We’ve now seen trade protectionism as a reaction to (countries’) own problems.

“You’re seeing security issues becoming economic issues, like buying from Chinese companies.

“It’s a whole range of different things that you will see that are very different from what happened in 2008.”

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Mr Milanovic, whose new book Capitalism, Alone, looks at the impact of globalisation and inequality, said: “I believe that the period from 2006 to 2008 represents a watershed period because many of the problems that we deal with today became clear with the crisis.

Gordon Brown with economist Branko Milanovic at the Edinburgh International Book Festival (Tom Eden/PA)

“I see the crisis a little bit like when you have high tide – before the crisis – that covers all the rocks, all the issues, which were to some extent covered because the water was very high so you were not seeing them.

“Well when the water withdrew, which is what happened with the great recession, you saw many of these issues,” the Serbian-born economist said, citing middle-class incomes “camouflaged by the ability to borrow very heavily”.

The economic crash has “ushered us into an era of globalisation which is new compared to what it was between 1989 and 2006”, he said.

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