Greece

Lord Higgins Excerpts

Monday 6th July 2015 Lords Chamber

[Lord Higgins (Con)]

My Lords, I understand the point made by my noble friend, but none the less, it is very important that the Chancellor’s expertise and our own in this matter should be fed in, at any rate behind the scenes, perhaps to try to pour oil on troubled waters, which up to now has been very difficult. I previously expressed in your Lordships’ House a view similar to that of my noble friend Lord Lawson. The economic reality which Greece is facing is that it is locked into an uncompetitive exchange rate, and it is not going to become competitive. No amount of bailing out or assistance otherwise will prevent that happening. If it is patched up now, we will be back in the same situation in a comparatively short time.

None the less, I urge my noble friend to make two points in these discussions, if need be behind the scenes. First, it is very important to make clear to Greece, and for our European partners to do so, that leaving the eurozone does not mean that it has to leave the European Union, the political implications of which would be very serious indeed. Secondly, if we get to a situation where Greece leaves the eurozone, it will be tremendously difficult to sustain the new exchange rate, and it would be advisable for the financial assistance that would otherwise be given in the form of bailout to be given to sustain Greece so that after leaving the eurozone it did not end up in a constant cycle of inflation and devaluation. Such a situation would have to be stabilised, and we should do all we can to ensure that it would be. Will my noble friend seek to ensure that that would happen?

[Lord O'Neill of Gatley]

My Lords, my noble friend raises some very interesting ideas and suggestions, and in the course of our ongoing discussions with our friends in all parts of the eurozone, which I am sure will continue through the rest of today and tomorrow, we will pass those ideas on. I thank him.