Lord Dykes
To ask Her Majesty’s Government when they will next hold talks with eurozone representatives to discuss the present state of currency markets.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, Ministers regularly meet their opposite numbers from other member states to discuss pertinent economic and financial issues, including currency issues, at ECOFIN. The next council meeting is currently scheduled for 15 February.
Lord Dykes
I thank the Minister for that Answer and for the fact that, on at least four or five recent occasions, HMG have said with great emphasis that the United Kingdom benefits directly from a strong, stable and secure eurozone. Does he feel that if the City, which is probably the largest euro-trading market in the world now, is undermined by greedy gamblers still spreading false stories about the strength of the euro, that would be a tragedy for the City of London?
Lord Sassoon
My Lords, we want to see a transparent, deep and liquid market in the euro, other currencies, commodities and all forms of securities. As my noble friend suggests, it is right that London has taken the lead not only in global currency trading but in so many other markets. This Government intend to ensure that that continues to be the case.
Lord Barnett
Could the Minister confirm the recent figures issued by the highly respected Bank for International Settlements that the sovereign debt owed to British banks by Ireland, Greece and Portugal is something like $233 billion and would be $370 billion if Spain was included? In those circumstances, would it not be sensible to involve ourselves in discussions on a serious eurozone scheme that would help to avoid any serious problems?
Lord Sassoon
My Lords, the European stability mechanism is the permanent mechanism that will replace the temporary arrangements and there is a commitment among European leaders to complete the design by March 2011. Even though we are not in the eurozone and will not be a member of the new stability mechanism, we have been invited to participate in the design. My right honourable friend the Chancellor confirmed to President Juncker, I think on 7 December, that the UK would take up that invitation to participate in the design.
Lord Trimble
My Lords, will Her Majesty’s Government be prepared after 25 February to support the Irish efforts to renegotiate the interest rates on the finance made available to Ireland, as that would be preferable to a default, which would almost certainly be the alternative to such a renegotiation?
Lord Sassoon
My Lords, I think that we had better see how this plays out. It is encouraging that the European financial stability fund was able to make a successful bond issue at the end of last month. There was something like €45 billion of demand, which, in the technical phrase of the markets, was considered a blow-out—a hugely successful deal. That brings into question whether the terms can in any way be softened, but we had better wait to see how this evolves.
Lord Eatwell
My Lords, the noble Lord has said on numerous occasions to the House and again today that the stability of the eurozone is in Britain’s best interests. He has also told us today that Britain will participate in the design of the new stability mechanism. Will he tell us whether Britain will participate fully in the operation of the new stability mechanism, once designed, or will we continue to hover irrelevantly on the sidelines when Britain’s interests are at stake?
Lord Sassoon
My Lords, I have been completely clear, as has my right honourable friend the Chancellor of the Exchequer on numerous occasions, that while we wish to see a stable eurozone, which is indeed in Britain’s best interests, we will not be a part of the new permanent European stability mechanism, which is a matter for the eurozone countries. However, that does not mean that we are not rightly concerned, as I have just explained, to make sure that the stability mechanism is established in an appropriate way. Just as we played a constructive role in relation to Ireland, we will continue to play a constructive role in relation to all these matters as we go forward.
Lord Newby
My Lords, following on from the previous question, will the Minister confirm that the Government will press the ECB to issue more euro-denominated bonds? That is a cheap and efficient way of generating funds which can be taken up by Ireland, Greece and the other eurozone member states that are now in financial difficulties.
Lord Sassoon
My Lords, I am grateful to my noble friend for again underlining some of the successes in recent financing in the eurozone, which is an encouraging sign. I would not go so far as presuming to give the ECB further advice, but certainly recent market operations have been encouraging.
Lord Stoddart of Swindon
Does the noble Lord agree that the fact that we are not in the euro has meant that our currency has been able to take the strain and that exports have increased? This country is likely to survive much better out of the euro currency, especially in regard to interest rates, which have been kept particularly low, to the benefit of industry and house buyers.
Lord Sassoon
I am grateful to the noble Lord and I thoroughly endorse his sentiments. This country has benefited greatly in recent years through the crisis by not being in the euro and by being able to develop our own policy responses. This coalition Government have no plans to enter the euro and are not making any preparations to do so at any future date.
Lord Pearson of Rannoch
Will the noble Lord go further and agree that, if the euro had never been invented, the currency markets and the world economy would not be in the trouble that they are?
Lord Liddle
My Lords, does the Minister have a comment on reports in today’s Financial Times that the French and the Germans are negotiating for the eurozone a competitiveness pact, which would have considerable implications for the single market? What steps will the Government take to ensure that Britain is fully involved in these discussions and that this will not be another case where we will be hovering on the sidelines?
Lord Sassoon
My Lords, I cannot comment on any specific proposals that might come forward from France and Germany, but the Government are right at the forefront of discussions to extend the single market to make sure that competitiveness issues internally and externally for the EU competing globally are kept firmly at the forefront of the European agenda.
Baroness Williams of Crosby
Have the United Kingdom Government had any discussions with the German Government about coming into the European bond market, which, as my noble friend will know well, would have a very favourable effect on yields?
Lord Sassoon
I shall not comment on individual discussions about market matters, but I again note some of the positive developments in Europe collectively as well as the auctions since the beginning of the year by Portugal, Spain and Greece. However, we must recognise that the currency situation remains very fragile.
Lord Grocott
As the Minister is clearly pleased that Britain is not a member of the euro, would he like to remind the House which Government made that decision and would he like to join me in congratulating them on making the right decision?