Eurozone

Lord Liddle Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Howell of Guildford]

My noble friend is quite right: youth unemployment is a blight and a very serious issue everywhere, not least in this country as well as throughout Europe and many economies in the Middle East. The problem is general. My noble friend raised two points. She mentioned the European Investment Bank and the possibility of expanding its activities. This is a possibility and may well be discussed. As a broader point, she posed the question of austerity versus growth, as though they were opposites. The reality is that this polarised choice is a complete myth. Unless we can control our budgets effectively and run them with fiscal discipline, there will be no growth. There will instead be still further inflation, undermining the very growth that we want to see. A balance must be struck. It is not a choice; it is a balance.

[Lord Liddle]

On this side of the House we welcome what the Minister said about being open to increased resources for the European Investment Bank. However, will he tell us whether the Government broadly agree with the growth agenda being pursued by the new French President, François Hollande? Does he draw from the spate of election results that we have seen the conclusion that austerity in the eurozone is reaching its limits? Given that growth in the eurozone was larger than ours in the past year, will he draw that lesson for economic policy at home?

[Lord Howell of Guildford]

Neither the noble Lord nor I know how the discussions between the new French President and the German Chancellor will work out. However, he has read the newspapers, as I have, and it is fairly clear that some aspects of both arguments will have to be taken into account. That will demonstrate the very point that I just made to my noble friend. The picture that has been painted of either austerity or growth is completely unrealistic. The reality is that there will have to be the discipline on which the German people and Government have led very strongly, and in which they believe for strong reasons connected to their history, combined with the necessity to erode youth unemployment and to create and restore confidence in investment. This is a balance that must be struck. We certainly hope that the leaders of France and Germany will, in their wisdom, strike the right balance and maybe convey to the people of Greece the necessity for this balance, from which there is no escape. There is no unrealistic choice between going one way or the other—you cannot.