On the eve of President Obama's inauguration I wrote that the new president posed a test to Europe's ability to deliver and asked if a conservative-run EU would be able to seize this historic opportunity. But I did not imagine that Merkel and Sarkozy would fail so quickly. Along with Commission President Barroso they are putting Europe in the position of doing less to fight the global downturn than the US, China and Japan. Barroso continues to claim that the Europe is investing 3.3% of GDP in the recovery when this is widely recognised as fiction; the real figure is only 0.9%. This pales in comparison with the Obama stimulus, and despite the fact that we are faced with the worst recession since the 1930s, Sarkozy and Merkel are unwilling to spend any more to counter the downturn. They believe that this would damage their budgets, but the truth is that in the long term it is far more dangerous to do nothing.
Instead they talk only about new regulation and tax havens - that's all very well, but we urgently need action that will have an immediate effect on the economy. And that means spending money. On that point, I was disappointed to see the chair of British Airways describing tax havens, hedge fund regulation and executive pay as 'red herrings'. The truth is that we need a complete, integral answer to the crisis, and that includes both stimulus packages to relauch the economy and strong new regulation to prevent future crises. One without the other just won't do.