European Council

David Miliband Excerpts

Monday 27th June 2011 Commons Chamber

[The Prime Minister]

I am grateful for my hon. Friend’s support, and for his question. I have got us out of the mechanism from 2013, because Britain is excluded from the treaty change that is going through putting in place the new permanent bail-out mechanism. It took negotiation to get that deal, because we were in a mess beforehand.

[David Miliband (South Shields) (Lab)]

I have two brief questions. The Prime Minister mentioned Sir Mervyn King’s remarks of last week. Does the Prime Minister agree with Sir Mervyn that the combination of austerity plus bail-out will never bring Greece to solvency? Secondly, the Prime Minister mentioned the stability of the banking system in advance of what I believe is an inevitable Greek default. In that context, is it not the case that future European Councils will be discussing whether to use the European financial stability facility or the European stability mechanism to shore up and recapitalise the banking system, rather than throwing good bail-out money after bad?

[The Prime Minister]

Of course the Greeks have a debt and solvency problem as well as a liquidity problem, but they have decided that they want to use liquidity to give themselves some time to deal with their debt problem. That is the choice they have made—and that is the choice the eurozone members are supporting—and I can quite see why they want to do it in that way. Let me also just make the following point, as I think a number of colleagues will ask similar questions: we must be very careful not to speculate about the financial situation faced by a fellow member state of the European Union.