Finance: Eurozone

Lord Lamont of Lerwick Excerpts

Tuesday 19th July 2011 Lords Chamber

[Lord Sassoon]

My Lords, the Government are not the least complacent about the very serious situation in the eurozone, as evidenced by not only the continuing discussions around the next stage of the programme for Greece but also the situation of Italy as regards the capital markets and its interest rates recently. The most constructive things we can do are, first, to make sure, as the FSA and the Bank of England are doing, that the UK banks are subjected to stringent stress tests; and secondly that they continue to build up, as they have done satisfactorily so far, their capital liquidity positions. In his discussions with the eurozone, my right honourable friend the Chancellor has made it quite clear how supportive the UK is not only of the short-term measures in which we are not directly involved—the Eurogroup discussions around Greece—but also through ensuring that Europe presses ahead with the structural adjustments that are needed to bring sustained growth to Europe. At the same time, we also make it abundantly clear that it is for the eurozone itself to finance further bailouts and that the UK, as has been agreed in the context of Greece, is not going to be a direct participant in these bailouts.

[Lord Lamont of Lerwick]

My Lords, is it not clear, as the noble Lord, Lord Barnett, has pointed out, that while we all obsess about Rupert Murdoch and News International, there is a much more serious crisis actually brewing on the European continent? Is it not clear that two paths are open to the eurozone? One is to recognise a default by Greece now; or if that is judged too risky to the banking sector, for the eurozone then to come up with what it has always promised, which is to do whatever is necessary to stop the bickering among the 17 Governments, to stop the arguments for the European Central Bank and to come up now with a comprehensive solution rather than delay it until the autumn, which will be immensely damaging to Italy and not least to other countries both inside and outside the eurozone?

[Lord Sassoon]

I certainly agree with my noble friend about the relative seriousness of different crises that are going on at the moment, and I repeat that the crisis in the eurozone is extremely serious. As to prescriptions and questions about what the eurozone would do, my noble friend speaks words of wisdom. However, it would not be appropriate for a UK government Minister to lecture the eurozone as to what to do. We shall look with considerable interest at what the meeting of eurozone leaders over the next two days comes up with. It is important that they make further considerable progress.