UK Chancellor hits out at Europe over protectionism

Gordon Brown said globalisation was best for jobs and prosperity . Picture / Reuters.

UK Chancellor Gordon Brown has launched an outspoken attack on the rising tide of protectionism across Europe, accusing its governments of blocking cross-border takeovers for reasons of economic patriotism.

The Chancellor also urged EU partners to accept the need for steeper cuts in farm subsidies as the way to strike a new deal on world trade that would deliver £300 billion ($888 billion) of economic growth.

Both issues will be centre stage at meetings of EU finance ministers this week and of the G8 rich nations at the weekend.

Speaking to business leaders at a CBI dinner, Mr Brown said there had been a backlash against globalisation across Europe.

"In the last few months - as talk of national champions rather than global companies resurfaces - we have seen France block Italian takeovers, Italy block Dutch banking takeovers, Spain block German energy bids and Poland block Italian financial service bids," he said.

He said there was a "danger of a relapse into protectionism ... and economic patriotism" in Europe and Latin America.

"What we must do is win the argument that is raging throughout the world showing that embracing globalisation, not retreating into protectionism, is the best way to growth jobs and prosperity for all.

At the G8 St Petersburg summit [on Saturday] I will call for world finance ministers to lead the debate about who benefits from globalisation."

He became the latest politician to contrast the current rise in economic patriotism with the nationalism of the 1920s and 1930s that led to the rise of Fascism and the Second World War.

"Instead of moving out of depression, beggar-my-neighbour, head-in-the-sand protectionist policies deepened recession and set nation against nation," he said.

However, interviewed on BBC Radio yesterday, the Chancellor side-stepped questions about his view of a takeover of Centrica, the UK gas company, by Gazprom of Russia.

"I think with Gazprom there are questions about politics as well as economics," he said. In February, the UK Government said any Gazprom bid would come under "robust scrutiny" after reports it was considering an offer.

Russia's role in supplying the European gas market will also be discussed at the G8 meeting. The Chancellor said he would also use the summit to demand a timetable for the completion of the stalled trade talks.

Countries such as France and Germany must agree to steeper cuts in the Common Agricultural Policy budget that experts see as a block to a trade deal, he said.

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