EU: Euro Area Crisis

Lord Campbell-Savours Excerpts

Thursday 24th May 2012 Lords Chamber

Asked by

[Lord Campbell-Savours]

To ask Her Majesty’s Government what assessment they have made of the effect on the European economy and financial institutions of the crisis in the euro area.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government make regular assessments of the economic situation as part of the normal process of policy development. The OBR, the OECD, the European Commission, the IMF, and many others expect a euro area recession this year. As we have said, if the euro area does not definitively sort out its ongoing problems, the uncertainty that that will create and its impact on confidence across Europe will continue to have a chilling effect on Britain and the global economy.

[Lord Campbell-Savours]

My Lords, does not Germany bear some responsibility for problems in the eurozone in that it was Germany that turned a blind eye when Goldman Sachs fixed Greece’s books to secure its entry into the euro; it was Germany that turned a blind eye to breaches of GDP limits in the European stability and growth pact; and it was Germany that promoted the euro currency to prevent regional devaluations in neighbouring nation states, thereby protecting its own export markets within Europe? Surely Germany should show a little more flexibility in these matters.

[Lord Sassoon]

My Lords, the key issue about Germany in relation to this Question is that we should be grateful that the German economy continues to grow. About 9% of the UK’s exports go to Germany. It is a very important market for us and it is critical both for us and for the eurozone that Germany and its economy continue to perform relatively strongly.