European Council

Lord Higgins Excerpts

Monday 21st June 2010 Lords Chamber

[Lord Higgins]

My Lords, I welcome the forthright attitude taken by the Prime Minister regarding the eurozone, but clearly the situation there presents considerable risks to the United Kingdom, even though we are not a member of the euro. Are we to understand that there was no detailed discussion at the Council on the widespread discussions taking place outside on the possibility that some members of the eurozone might find themselves in a position whereby they have to withdraw? Indeed, it has recently been suggested that it might be disruptive in that context if Germany were to withdraw, rather than the countries in the weakest position. At all events, the scheme was designed to prevent people withdrawing and it is important that we should not hide our heads in the sand regarding that possibility and we should make contingency plans. In particular, there is a major practical problem. Is there not perhaps some case for setting up a contingency fund of what we might call euro-exit notes and coins, which would be used if a particular country had to withdraw? Surely it is better that we should plan for that possibility, whatever our position might be on whether it is likely to happen, rather than suddenly finding that we are in a situation where nothing can be done because of the practical point that I mentioned.

[Lord Strathclyde]

My Lords, my noble friend raises an important and interesting issue. The eurozone is of course extremely important to the British economy. We want a strong and competitive eurozone area, but it is clear to anyone who has been following this subject in recent months that there are substantial problems with the euro and, most notably, with Greece. However, I am not in a position to speculate in any way on what may or may not happen in any other eurozone country or, indeed, on what contingency plans are envisaged over the next few months. The G20 has recognised that countries with serious fiscal challenges need to accelerate the pace of consolidation. In that regard, we welcome the recent announcements of further consolidation plans by the Governments of Spain and Portugal. It is important that to rebuild confidence all Governments implement in a rigorous manner the measures that they have announced. It is that confidence which will provide strength again to the eurozone. That in the long term will be to all our benefits.