Greece

Debate between George Osborne and Mike Gapes

Monday 29th June 2015 Commons Chamber

[Mr Osborne]

As I have said, Britain is much better placed than it was a few years ago; our banking system is much better capitalised. Of course, the eurozone and the European Central Bank have previously taken steps to try to contain the contagion, for example by setting up the outright monetary transactions programme and the European stability mechanism—in other words, various bail-out mechanisms that came into operation during Spain’s financial problems a couple of years ago—but I was very clear in my statement that a Greek exit from the euro would have an impact on Europe’s financial system and knock-on effects for the UK. I do not think that anyone should underestimate the challenge of establishing that a country could leave the euro. Those are all issues that we need to be alert to in the months ahead.

[Mike Gapes (Ilford South) (Lab/Co-op)]

Does the Chancellor accept that glib comparisons between Greece and other countries do not take account of the fact that even before the global financial crisis Greece’s debt-to-GDP ratio was 100%? It rose to 170% by 2011, which was much worse than in Spain, Italy or this country. Therefore, should he not concentrate on the specific problems of the previous Governments in Greece who created the situation and the dysfunctional coalition between the far left and the far right, which seems unable to make sensible decisions?

[Mr Osborne]

I was making the observation that the UK is far better prepared than it was five years ago, when we had a budget deficit of over 10% and an undercapitalised banking system—something I was well aware of, because the Greek crisis had its first big flare-up a few days before I became Chancellor of the Exchequer. We are in a better position, but I do not pretend that the UK will be immune from the impact of the financial problems in the eurozone.

LIBOR (FSA Investigation)

Debate between George Osborne and Mike Gapes

Thursday 28th June 2012 Commons Chamber

[Mr Osborne]

HSBC and RBS are two of the banks under investigation, but international banks such as UBS and Citigroup are under investigation too, partly for activities conducted in this country.

[Mike Gapes (Ilford South) (Lab/Co-op)]

The Chancellor referred to the costs and penalties that the general public have suffered. Is there any estimate of how much per head ordinary people in this country have suffered from the activities of a group of corrupt banksters?

[Mr Osborne]

First, I hope the hon. Gentleman does not mind me saying on behalf of the whole House that we very much welcome him to his place. He has the deepest sympathy of the whole House for the tragedy in his family. It is good to see him back here.

There is no estimate of the cost to individuals or consumers, and it would be very difficult to construct one. We are talking about the daily rate set, in the case of these abuses, over a three or four-year period, and it was used to set mortgage rates, loan rates and all sorts of other things. Sometimes the rate was manipulated to be too low and sometimes it was manipulated to be too high compared with the true market price. We do not have an estimate, but it is clear that, as the FSA says, the manipulation contributed to the risk to the entire financial system, which then, in effect, collapsed, not because of that, but as part of the culture we have been talking about, and the country has paid many billions for that.

IMF

Debate between George Osborne and Mike Gapes

Monday 23rd April 2012 Commons Chamber

[Mr Osborne]

We are not pouring money into some eurozone bail-out fund. We are providing a loan to the International Monetary Fund. I hear what my hon. Friend says about the decision, but every single previous Government have been part of increases in IMF resources—in 1983 and in 1990, under Lady Thatcher’s Government, we contributed to increases in IMF resources. He says that these countries are lost causes, but in Portugal, where very difficult decisions have been taken, exports are up by 7% and the current account deficit has been reduced; Ireland has gone into a current account surplus and Spanish exports are up. Of course they are having to make the adjustments in a brutal way, by real cuts in wages rather than a currency devaluation, but that is the consequence of being in a single currency. The Governments in those countries, with, in most cases, the support of the public now, are taking those difficult decisions. It is interesting that even in Greece, which is probably the most traumatically affected of those countries, there is a clear and overwhelming public majority for Greece staying in the euro.

[Mike Gapes (Ilford South) (Lab/Co-op)]

The Chancellor claimed that the additional contribution that this country is making is proportionate to our shareholding. Can he explain why we are paying $15 billion, whereas France is paying $40 billion, Germany $55 billion and Japan $60 billion, and South Korea, with a smaller population and a smaller economy than ours, is paying the same as we are?

Eurozone Crisis

Debate between George Osborne and Mike Gapes

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

I absolutely agree that there is a very important role for the EU27 to strengthen and deepen the single market and to promote free trade—the EU has just concluded a free trade agreement with South Korea that benefits the British economy directly. Also, the EU will have an important role in things such as financial services regulation, and it is important that that is discussed at the level of the 27, because we are such an important player in the financial services industry worldwide. So I completely agree with the hon. Gentleman. Britain has been absolutely clear in recent months that issues affecting the 27 should be discussed by the 27, not at the level of the 17 euro members. It has been partly through our insistence, with others, that there have been two European Councils and an ECOFIN this week to ensure that proper procedures are followed.

[Mike Gapes (Ilford South) (Lab/Co-op)]

The Chancellor said that British interests should be properly protected when the eurozone countries move towards giving up national sovereignty and towards greater fiscal integration. Will he clarify how that will happen?

[Mr Osborne]

This is the argument that we have to make over the coming months and as the discussions start on whether there is going to be a future treaty change—although what is being talked about is a treaty change of a limited nature. We have to look for ways of securing Britain’s influence and voice, and the influence and voice of the other nine EU member states that are not in the eurozone. That is absolutely top of our negotiating agenda. However, we also want to secure a rebalancing of the responsibilities between the EU and its member states, which will be another important part of the argument that we make.