Johnson’s economic education

When he took on being shadow Chancellor, Alan Johnson said that he would need to get hold of an economics primer. Judging by his comments in yesterday’s debate about the bi-lateral loan to Ireland, he hasn’t got that far into it. Johnson told the House,

‘The euro had nothing to do with the [Irish] property boom and bust’.

This is a bizarre statement. If Ireland had been able to set its own interest rates, they would have been far higher and thus dampened down the property boom. As Johnson’s close friend and the former Chancellor Alistair Darling said later in the debate when asked if he agreed with the Shadow Chancellor’s remarks, ‘The circumstances in which Ireland finds itself are complex, but there is no doubt that one problem is that a common interest rate right across Europe is perhaps inappropriate for an economy that is rapidly investing in an asset bubble.