Greece

Debate between Derek Twigg and George Osborne

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

My hon. Friend is right to draw the House’s attention to some of the economic issues in China, but if we can stay in the western hemisphere for the purposes of this statement, the eurozone is a much better place than it was in 2012 to deal with any contagion from the Greek crisis. That is reflected in the fact that the bond spreads for the peripheral countries have not gone out today, because the ECB is prepared to do, in its words, “whatever it takes” in its outright monetary transactions policy. We have the European stability mechanism, which is, in other words, a sort of central bail-out fund. We have more of the machinery in place than we did in 2012, which is why we are not seeing quite as much contagion. I would make a general observation I have made before, however. I do not think people should underestimate the medium to long-term impact of a country leaving the euro and showing that it is possible to exit that currency.

[Derek Twigg (Halton) (Lab)]

The Chancellor said in his statement last week and has said since that we must hope for the best and prepare for the worst. I asked him last week what the worst was. May I ask again what the worst will be for the UK?

[Mr Osborne]

The worst for the UK and the whole of Europe will be a completely disorderly situation over the next few weeks that has an impact on Europe’s financial system. As Britain is one of the most open economies in the world, that will impact on us. We saw the impact of the problems in the eurozone in 2012 and how they spilled over into the UK. That is the challenge of any financial crisis and it is a challenge for the UK as an open economy. That is why we are urging those on all sides to try to resolve the situation.

Greece

Debate between Derek Twigg and George Osborne

Monday 29th June 2015 Commons Chamber

[Derek Twigg (Halton) (Lab)]

We all hope for a resolution in Greece, but clearly it cannot be right to force more cuts and austerity on the Greek people and increase the pain they have already suffered. The Chancellor said in his statement that

“we hope for the best, but we prepare for the worst.”

Could he tell us what “the worst” is for the UK?

[Mr Osborne]

Clearly, we are a large economy that is probably the most interconnected and open of the major economies of the world. We have a very large financial sector, so we are exposed to financial turbulence wherever it occurs in the world, which is all the more reason why we need a proper system of regulation and we have now put the Bank of England in charge of regulation. We also need properly capitalised banks—under that new system of regulation, our banks have been recapitalised—and we need to make sure that we are not carrying a very large budget deficit. We have halved the budget deficit and we will take further steps next week to reduce and eliminate that budget deficit. We are prepared for whatever the world throws at us.