ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN:
A very good morning to you, Mr Alexander. Talking about Greece where it all seems to hinge upon at the moment, what can the UK do apart from attending the meetings as of course our government has been doing, the various meetings that have been going on over the last few months, there is nothing we can do to intervene in Greek internal politics or indeed the Italian ones.

DOUGLAS ALEXANDER:
Ultimately Greek internal politics are a matter for Greek citizens and Greek representatives but there is an important job for Britain and I believe for George Osborne at the Finance Minister’s meeting, which is to urge the European Central Bank to recognise its primary responsibility as the lender of last resort for the eurozone, that’s the job that the Bank of England does for sterling, it’s the job the Federal Reserve does for the US dollar and in that sense there is going to be a heavy responsibility on Finance Ministers this week and no doubt on leaders as well.

DERMOT MURNAGHAN:
There is an element of the mouse that roared in all that isn’t there, given that the Germans aren’t that keen and it really depends upon them?

DOUGLAS ALEXANDER:
Yes but we are in a position, and Chancellor Merkel understands this, that the consequences for Germany itself are very severe if we fail to reach resolution. We are in a worrying situation where we have had two international summits in as many weeks that have not yielded either the certainty or the solutions that all of us were wanting. That for me is not an invitation to step back from engagement with European partners, there needs to be further discussion to get that …

DERMOT MURNAGHAN:
But in that analysis you seem to be suggesting that the British government could be doing more. It is often said of course that we’re not in the eurozone and Nicholas Sarkozy has shouted at the Prime Minister on that very subject, is there any more that Britain can do in terms of pushing Europe in that direction?

DOUGLAS ALEXANDER:
Nobody doubts the difficulty of the situation and the challenges facing the British government and other governments internationally. If this was easy it would have been solved years ago. That being said, I think there are two genuine areas where we diverge from the government, one is the approach the government has taken because as recently as March, David Cameron told Chancellor Merkel he didn’t want to be at those meetings involving the eurozone. We then had a statement from George Osborne speaking to the Financial Times in July where he acknowledged the inexorable logic of moving towards a single fiscal area as well as a single currency but thereafter the government didn’t seem to engage. My criticism of the government is not that this is easy but that they were asleep at the wheel over the summer until a point just two weeks ago on the eve of the summit where they seemed to wake up and recognise, not just the very great economic threat but the political threat facing Britain from the emergence of a two-speed Europe with the potential for Britain …

DERMOT MURNAGHAN:
I see in your analysis that early inaction weakened the position.

DOUGLAS ALEXANDER:
Well I think it’s led to perhaps an inevitable confusion on our European partners as to what position Britain is taking. Do they want to be in the room or out of the room? We ended up with the farcical situation two weeks ago where David Cameron arrived at the summit lecturing the Germans and left the summit being shouted at by the French. Now that’s not a good outcome for Britain and …

DERMOT MURNAGHAN:
But you mentioned that …

DOUGLAS ALEXANDER:
Just let me make the second point, one is the approach which is a retrospective piece, this is what we think they should have been doing, what’s different now is we also think there needs to be a more balanced approach. The real reason the Greek economy is in these difficulties is partly because of Greek productivity, the efficiency of the Greek system, the capacity to raise taxes and there is a need for very fundamental reform within Greece but those problems have been exacerbated as it turns out by membership of the single currency and that is why it is imperative that we have an argument set out by the British government about the need for growth as well as deficit reduction.

DERMOT MURNAGHAN:
I want to ask you a question about that, I definitely do, but I just wanted to backtrack a minute. You mentioned the Chancellor and his analysis, the inexorable logic about fiscal and monetary union, is that one you share, that it is one way out way down the line?

DOUGLAS ALEXANDER:
That may not be way down the line, it is certainly one possibility as to the way that this crisis within the eurozone is resolved but let’s have a broader sense of what we’re talking about for a moment. There are two big changes happening that could affect British foreign policy for years to come, one is as we’ve just acknowledged the prospect of the emergence of a two-speed Europe. That’s something that has been resisted, not just by Labour foreign secretaries but by Conservative foreign secretaries for decades for fear that Britain would be marginalised and our interests lost. But there is also a second big change that’s happening geopolitically. The United States is retreating from being an Atlanticist power, heavily engaged in Europe, and is increasingly looking towards the Pacific and an Asian century as they see it. So in that sense, if we have changes in the relationship with the United States and changes in relation to Europe, now is the time that we need the British government to be speaking clearly and with one voice and my fear is that they’ve spent so much time negotiating with their own back benchers that they have been missing opportunities in recent months, albeit in difficult circumstances, to be both defending and advancing Britain’s interests and those interests are served by fundamental reform in the European Union.

DERMOT MURNAGHAN:
Your use there of the Greek example which of course we’ve heard from your colleague the Shadow Chancellor as well, that this is what happens if you cut way too far, way too fast, you just can’t get growth and you end up in this eternal spiral, you go down and down and the debt gets bigger and bigger. Are you really serious about that, that in this environment Britain could stick its head above the parapet, with its debt profile, it is now seen as a safe haven by many international investors because of the government’s budget deficit reduction strategy, it could stick its head up and say no, we’re going to borrow a little bit more. Are you really serious about that?

DOUGLAS ALEXANDER:
Let’s take that question in each of its parts. First of all, was it wise for George Osborne to assert that Britain is a safe haven, that the British economy is out of the danger zone? I personally don’t think that recognises …

DERMOT MURNAGHAN:
Well we can look at the borrowing rates on bonds, they are way, way ….

DOUGLAS ALEXANDER:
But let’s look at British growth which has flatlined for a year, let’s look at the British borrowing figures where actually George Osborne is already more than 40 billion higher than his projected borrowing just a year ago. That’s because the longer the unemployment queue, the higher borrowing and actually to get deficit reduction you need growth in the economy, so there is a case I think for a more balanced approach which is what we argued for in the Darling plan when we were in office, the plan that we endorsed when we moved into opposition was to have a better balance between sustaining demand and getting growth in the economy and at the same time as bearing down on the deficit.

DERMOT MURNAGHAN:
Do you not accept that it is the eurozone problems that are causing a lot of the difficulties with growth?

DOUGLAS ALEXANDER:
The latest figures that we had, the half percent growth which continues that process that we’ve seen in the last year of a stagnating economy, the part of British manufacturing and British exports that was sustaining itself was obviously those facing outwards. The real collapse in demand has been internally so I know that George Osborne is going to spend many months now telling us everything would have been fine but for the eurozone, the reality is that the figures point in a different direction, that the external facing parts of the British economy have so far held up better than some people predicted, it has actually been the collapse of confidence and demand within the British economy which explains the fact that we have been stagnating and flatlining for almost a year.

DERMOT MURNAGHAN:
I got you on to the Shadow Chancellor’s territory there a bit, let me take you on to some of your leader’s territory now. He has been writing today about the St Paul’s protests, what’s been going on there, the problems it’s caused to the Church of England but describing it as something that is I suppose symptomatic of a wider concern within our society, about the inequalities between the rich and the poor, the distribution of wealth in our country. Is that something you feel Labour can connect with?

DOUGLAS ALEXANDER:
Absolutely. Let me give you two examples, one is in my own constituency, I hear this all the time. Now there are not many from my constituency who are going and camping at St Paul’s but they feel a deep unease about what they are seeing about the disconnect between some of the pay that we’ve seen even in the last couple of weeks being awarded to chief executives and the difficulties in the economy. The other story I’ll tell you, two weeks ago I was in silicon valley and I met a young entrepreneur who told me if she wasn’t running her business she would like to be joining the Occupy protests in Oakland in California and she said the reason I support them is because I am a capitalist. I’m a small business, I can’t generate the income that I need without borrowing from banks and I can’t get the capital that I need from banks so I think not just in Britain but right around the western world is a recognition that there is something wrong and it does need to be addressed. I think Ed’s point is our responsibility as the Labour party is not to be a party of protest, it’s to be an alternative party of power but that is a challenge for us to give not just expression to but offer answers for the kind of issues, sometimes incoherent, inchoate but …

DERMOT MURNAGHAN:
That’s the point, just the last question I wanted to ask you, do you think it would be worth – you are reporting some of those comments at third hand, you can get down to St Paul’s, you can go down and have a word with the mix of people that are down there and the issues they are exposing and your leader should go down there as well.

DOUGLAS ALEXANDER:
Preparing for these interviews I read the Sunday newspapers as you would expect and I think whatever your criticism of the protestors, they have not proved bad at getting publicity for themselves. I think most of the newspaper are filled with advice for the protestors …

DERMOT MURNAGHAN:
But it is worth meeting them face to face isn’t it?

DOUGLAS ALEXANDER:
Listen, I think the protestors are making their point of view clear. Our primary responsibility of course is to listen to people, not just in one part of the country but right across the country, but then to take forward our work in parliament to show there is a genuine credible alternative to both the rules that apply at the moment and the way the government are making their decisions.

DERMOT MURNAGHAN:
Mr Alexander, thank you very much indeed for your time. Douglas Alexander there, the Shadow Foreign Secretary.

DOUGLAS ALEXANDER:
Thank you.