Euro

Lord Sassoon Excerpts

Thursday 27th October 2011 Lords Chamber

[Lord Howarth of Newport]

To ask Her Majesty’s Government how they are seeking to safeguard the United Kingdom’s interests in discussions with European Union partners on the future of the euro.

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

My Lords, a stable euro area is in the UK’s interests and the Government are actively engaged in seeking to achieve this. While acknowledging the need for greater euro area fiscal integration, the Government are working to ensure that the UK is not part of that integration and that our influence on and interests in the single market, competition policy and financial services are safeguarded. We have ensured that the UK will not participate in the European stability mechanism.

[Lord Howarth of Newport]

My Lords, which would be more dangerous for Britain—financial and fiscal integration of the eurozone, with Britain marginalised in a minority bloc and outgunned in EU decision-taking; or disintegration of the eurozone, with its attendant chaos; or, most likely, a combination of the two? With eurozone countries objecting to Britain’s interference, and with both the coalition and the Conservative Party riven by internal disagreement, how can the Prime Minister hope to exercise useful influence or, indeed, to save his Government from being destroyed by Europe?

[Lord Sassoon]

I really do think that the noble Lord, Lord Howarth of Newport, puts up completely false choices and alternatives here. The fact is that significant progress has been made overnight to stabilise the eurozone. A lot more work needs to be done to fill in the detail but that is a first major step. I see that the noble Lord is nodding his head. That is point number one. Secondly, the idea that the UK is going to be marginalised in the “euro-outs” is simply not true. On Sunday, the Prime Minister established the key principle that we would be there, as we were yesterday, with a voice at the table on all matters involving all 27 EU member states. The idea behind the Question is that somehow it is just the UK versus the rest. We must be reminded that the other euro-outs include Poland, Sweden, Hungary, the Czech Republic and four others. We will play a critical part in driving forward the single market, and that is very important to the euro area.

[Lord Lawson of Blaby]

My Lords, does my noble friend not agree that it is a fundamental fact that monetary union in the eurozone is not viable short of a fiscal union, and that a fiscal union cannot come into being without full political union, which fortunately is as improbable as it is undesirable?

[Lord Sassoon]

My noble friend Lord Lawson of Blaby cuts to the chase with singular directness. I think that this is an onion with many layers to it and we need to go stage by stage. Having established the immediate priority of the stabilisation of the eurozone, of course the strengthening of the fiscal arrangements within the eurozone is the second priority. The Government signed up to that during the summer and the implementation of that needs to be taken forward. It is in the UK’s interest that that happens. It may lead, as the overnight statement said, to treaty changes and, as a consequence of that, the UK Government will seek to ensure that they take advantage of any opportunity to advance the UK’s interest. I think we need to regard this as a step-by-step process.

[Lord Liddle]

My Lords, will the noble Lord pass on our best wishes to the Prime Minister for many more enjoyable dinners with the Swedes and Poles, having enjoyed one yesterday evening? Does the Minister agree that in the new two-tier Europe, which this Government are bringing on, it is essential to defend Britain’s vital national interest in the single market and financial regulation by keeping Britain as close as possible to the eurozone? In the light of that, will they be reconsidering their decision not to join the euro-plus pact, which was offered? Does he not also agree that it is totally contradictory and counterproductive to talk at the same time about repatriation of powers for which, if the coalition can agree on what they mean, our partners are bound to demand a higher a price?

[Lord Liddle]

How do the Government propose to resolve this looming conflict between defence of the national interest and their own party unity?

[Lord Sassoon]

My Lords, it really is not helpful for the party opposite to try to paint this completely false picture of a two-speed Europe. As I have already explained, the euro-out countries are integral to the single market—the eurozone understands that—and we will be part of the centrality of what needs to be done to drive forward structural reform of the single market, and so on. The other thing that is completely wrong is to paint Europe now as two-speed. There is a variable geometry EU, as we have it. Remember that other important areas such as justice and home affairs, as the noble Lord, Lord Liddle, recognises, also run in different ways. Therefore the idea that there will be some fundamentally changed, two-speed Europe is again ridiculously simplistic.

[Baroness Kramer]

My Lords—

--- Later in debate ---

[Lord Pearson of Rannoch]

My Lords, is it not obvious that last night’s measures are merely yet more sticking plaster on a wound that will therefore continue to poison the world economy? Is not the only answer to abandon the whole ill-fated project of European integration, get rid of the euro and go back to the democracies of Europe freely trading together and with the rest of the world in their own currencies?

[Lord Sassoon]

No, my Lords, that is not the situation. Forty per cent of our trade goes to the eurozone, 50 per cent goes to the EU, and we have to work to preserve the structure.

[Baroness Kramer]

My Lords—

--- Later in debate ---

[Lord Hannay of Chiswick]

My Lords, would the Minister be so good as to give the noble Lord, Lord Liddle, a reply to the question about the euro-plus pact? It may be that the name of this pact is unfortunate, but it is supported by a number of countries which are not in the eurozone, and its objectives relate very closely to our most important objective, which is to further the single market. Would he not agree that the priority now is not drawing up long wish lists for repatriation but working out how we are going to keep our position and keep the integrity of the single market?

[Lord Sassoon]

As the noble Lord, Lord Hannay, says, there are many things up for consideration and we need to consider the future architecture in the round and decide where it is in the best interests of the UK to move forward on all those issues. It would be too early to pick out one item this morning.