Budget 2010: The chancellor's speech in full

Ireland, another key trading partner, has contracted by over 10 per cent.

Spain is still in recession. Italy has slid back into negative growth.

Unemployment at 10 per cent across the euro area is adding to uncertainty.

All these factors are having an impact, particularly on open trading economies like the UK.

So it is imperative that EU countries act with renewed energy and vigour to get the European economy moving forward again.

We need to support trade, discourage protectionism, and take forward structural reforms.

Such continued international action is crucial – not only to global prospects – but to each and every country’s future.

Over the last two years, we have been reminded of the force for good that governments can be in protecting people.

The role of government is now equally critical in regulating the global financial system and putting in the right foundations for future growth, jobs and prosperity.

Mr Deputy Speaker, the crisis in the world economy started with the banking sector. So improved global financial regulation must be the key priority.

Our first test in the UK came with the problems of Northern Rock.

This Government intervened to protect savers and underpin the financial system.

The unprecedented decision to nationalise a high-street bank was controversial, as was our action later that year to recapitalise the banking system.

Other governments, right across the globe, also acted to stabilise the financial system.

I believe this judgement has been proved correct.

In the UK, the latest figures from Northern Rock show it is returning steadily to normality.

RBS is now being restructured and is rebuilding.

Last week Lloyds predicted a return to profitability this year.

We will sell our shares in RBS and Lloyds, as well as Northern Rock, in a way that maximises value for the taxpayer and recoups the money we invested.

We intend to get all taxpayers’ money back.

In the meantime, I can tell the House that the Treasury has already received over £8bn in fees and charges from the banks, in return for our support.

And, Mr Deputy Speaker, at the Pre-Budget Report I put in place a one-off 50 per cent tax on the excessive bonuses of bankers.

I made it clear that banks had a choice of whether to pay bonuses or not.

But if they did, given the amount of support the taxpayer had provided, I believed it was right that the country as a whole should benefit.

I can tell the House that this tax has raised £2bn, more than twice as much as was forecast.

This is money paid by the banks. Those receiving the bonuses will also, of course, have to pay income tax at their highest rate.

Mr Deputy Speaker, as well as supporting the banking system during the crisis, we need long-term reform to prevent excessive risk-taking.

Under our presidency of the G20 last year we put in place a plan to reform the international regulatory system.

But we still need to do more to strengthen global banking.

The G20 countries must put in place new rules on capital and liquidity by the end of the year.

And we also need to reform remuneration practices, improve cross-border resolution for when banks fail, and ensure international standards are implemented.

Mr Deputy Speaker, we cannot continue with a situation where the banks are rewarded for creating excessive risk, but the taxpayer foots the bill when things go badly.

More countries now agree on the need for an international systemic tax on banks.

This must be brought forward quickly, as I will urge international Finance Ministers in Washington next month.

I agree with all those who think that such a tax should be internationally co-ordinated.

Going it alone would costs thousands of jobs, not just in London, but across the country.

Spain is still in recession. Italy has slid back into negative growth.

Unemployment at 10 per cent across the euro area is adding to uncertainty.

All these factors are having an impact, particularly on open trading economies like the UK.

So it is imperative that EU countries act with renewed energy and vigour to get the European economy moving forward again.

We need to support trade, discourage protectionism, and take forward structural reforms.

Such continued international action is crucial – not only to global prospects – but to each and every country’s future.

Over the last two years, we have been reminded of the force for good that governments can be in protecting people.

The role of government is now equally critical in regulating the global financial system and putting in the right foundations for future growth, jobs and prosperity.

Mr Deputy Speaker, the crisis in the world economy started with the banking sector. So improved global financial regulation must be the key priority.

Our first test in the UK came with the problems of Northern Rock.

This Government intervened to protect savers and underpin the financial system.

The unprecedented decision to nationalise a high-street bank was controversial, as was our action later that year to recapitalise the banking system.

Other governments, right across the globe, also acted to stabilise the financial system.

I believe this judgement has been proved correct.

In the UK, the latest figures from Northern Rock show it is returning steadily to normality.

RBS is now being restructured and is rebuilding.

Last week Lloyds predicted a return to profitability this year.

We will sell our shares in RBS and Lloyds, as well as Northern Rock, in a way that maximises value for the taxpayer and recoups the money we invested.

We intend to get all taxpayers’ money back.

In the meantime, I can tell the House that the Treasury has already received over £8bn in fees and charges from the banks, in return for our support.

And, Mr Deputy Speaker, at the Pre-Budget Report I put in place a one-off 50 per cent tax on the excessive bonuses of bankers.

I made it clear that banks had a choice of whether to pay bonuses or not.

But if they did, given the amount of support the taxpayer had provided, I believed it was right that the country as a whole should benefit.

I can tell the House that this tax has raised £2bn, more than twice as much as was forecast.

This is money paid by the banks. Those receiving the bonuses will also, of course, have to pay income tax at their highest rate.

Mr Deputy Speaker, as well as supporting the banking system during the crisis, we need long-term reform to prevent excessive risk-taking.

Under our presidency of the G20 last year we put in place a plan to reform the international regulatory system.

But we still need to do more to strengthen global banking.

The G20 countries must put in place new rules on capital and liquidity by the end of the year.

And we also need to reform remuneration practices, improve cross-border resolution for when banks fail, and ensure international standards are implemented.

Mr Deputy Speaker, we cannot continue with a situation where the banks are rewarded for creating excessive risk, but the taxpayer foots the bill when things go badly.

More countries now agree on the need for an international systemic tax on banks.

This must be brought forward quickly, as I will urge international Finance Ministers in Washington next month.

I agree with all those who think that such a tax should be internationally co-ordinated.

Going it alone would costs thousands of jobs, not just in London, but across the country.