G8 and NATO Summits

Lord Darling of Roulanish Excerpts

Wednesday 23rd May 2012 Commons Chamber

[The Prime Minister]

My right hon. Friend makes an incredibly important point, which is that a single currency requires an active, interventionist central bank behind it. That is something that we have been saying for a very long time, and it is one of the reasons I have always been sceptical about the single currency. There is a growing realisation that, alongside plans to deal with deficits to provide fiscal credibility, there is a need for a more active monetary policy. That is what we have in the UK, with our single currency across our nations, and if Europe is to have a working single currency, it needs that sort of monetary policy too.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

While I welcome the change of rhetoric over the weekend, particularly from the Prime Minister, in recognising that austerity alone will not work—at least, from his point of view, in Europe; he might apply that here, too—will he tell us whether the German position has changed at all? It does not seem to have done so, but until it does, I shall find it hard to believe that the eurozone can come up with anything convincing or credible before the Greek elections on 17 June.

[The Prime Minister]

I have great respect for the right hon. Gentleman, and he raises absolutely the right point. I would say that the German approach is changing, to an extent, because the Germans know that alongside deficit reduction plans, in a single currency, there needs to be greater co-ordination of that single currency. Their concern is that they do not want to take their foot off the deficit reduction until they have more of a political system around the single currency. I understand their concern. This is one of the reasons that I never wanted to join a single currency; I have always believed that a single currency involved a sort of single economic government. The struggle is to try to convince countries in Europe that, alongside deficit reduction, they need a more active monetary policy, a European Central Bank that stands behind the currency, and the structural reforms, such as completing the single market, that we have always argued for.