EU: Fiscal Compact Treaty

Lord Barnett Excerpts

Tuesday 7th February 2012 Lords Chamber

[Lord Sassoon]

My Lords, I am happy to confirm to my noble friend that of course this intergovernmental agreement, which goes to the heart of strengthening the fiscal arrangements within the eurozone, is a necessary but not sufficient part of what we hope to see with the eurozone returned to health. There are a number of other critical elements, including sorting out the immediate situation in Greece, getting the European banks’ capital positions where they need to be, and so on.

[Lord Barnett]

My Lords, will the noble Lord be advising the Government to be one of the 27 member states agreeing to a fiscal solution to the problem or will the Government take the view that, whatever happens in the short term, in the longer term it is perfectly impossible for a country like Greece in the state that it is in to be able to have the same exchange rate and interest rate as Germany? In those circumstances, will the Government be making arrangements and planning for something to happen that would not be helpful, because, as the Chancellor put it, it would be disastrous if the whole thing broke up? Is contagion a bigger problem than many of us expected it to be?

[Lord Sassoon]

My Lords, it continues to be the Government’s wish that the eurozone holds together and makes the arrangements, some of which I outlined in my previous answer. As I have said in answer to previous questions from the noble Lord, Lord Barnett, the Government take all precautionary measures and look at all scenarios that there may be as this still very severe situation continues to unfold.