Eurozone Crisis

Lord Grenfell Excerpts

Tuesday 17th January 2012 Lords Chamber

[Lord Sassoon]

My Lords, of course I can confirm to my noble friend that we work extremely hard to make sure that the competitiveness of the EU and the eurozone is not lost in the discussions. It is encouraging—they are only early signs, but they are encouraging—that in the Merkel-Sarkozy discussions on 10 January there was specific reference to growth-enhancing policies for prioritising EU spend towards growth and competitiveness. We look forward to the letter which I think they are likely to write to President Van Rompuy ahead of the next Council meeting.

[Lord Grenfell]

My Lords—

[Lord Pearson of Rannoch]

My Lords—

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, there is plenty of time. Shall we hear from the noble Lord, Lord Grenfell, and then perhaps from the noble Lord, Lord Pearson?

[Lord Grenfell]

My Lords, given the unrest on the Conservative Benches in the other place, I was tempted to ask whether the Prime Minister had contingency plans for the full recovery and strengthening of the eurozone, but I have a more serious point to make. Does the Minister agree with me that it is extraordinary that the rating agencies disclaim all responsibility for the impact on borrowing costs of their downgradings when a Government like Italy’s are doing their best to solve their problems, and when an institution such as the European Financial Stability Facility—which was downgraded yesterday by Standard & Poor’s—is trying to maintain its lending capacity in advance of the creation of the new ESM, which will take some time? Do these unaccountable agencies just not care whether the impact of what they do is likely to hamper and jeopardise the eurozone recovery?

[Lord Sassoon]

My Lords, the credit rating agencies have a useful and important part to play in the good working of the financial markets. Your Lordships produced a report in committee on aspects of the regulation of the credit rating agencies on which we had a good debate before Christmas. There are issues about the performance of the credit rating agencies in respect of the financial crisis, but their record generally on sovereign ratings has been perfectly acceptable in most people’s judgment. However, I am not going to comment on their individual judgments in the past couple of weeks.