EU: Economy

Lord Pearson of Rannoch Excerpts

Wednesday 2nd November 2011 Lords Chamber

[Lord Sassoon]

My Lords, I do not accept the very simplistic idea that we are headed for a two-speed Europe. There is already a variable geometry in Europe in other areas apart from the euro, such as justice and home affairs, where there are different arrangements for certain member states. The critical lesson out of all this is that the UK must stick to its own fiscal deficit reduction policies because it is those which are giving us the benefit of 10-year interest rates today at 2.2 per cent, whereas countries such as Italy, which had interest rates very similar to ours before the financial crisis, have interest rates not at 2.2 per cent but at 6.2 per cent. So we must stick to keeping our own house in order.

[Lord Pearson of Rannoch]

My Lords, further to the question put by the Minister’s noble friend Lord Higgins, have the Government given any thought to the cost of returning first Greece and in due course the other crippled economies of the eurozone to their national currencies and, if necessary, supporting that transition with some variation of the Marshall plan? Have they thought about that concept, compared with continuing to throw unknown trillions at a project which cannot be saved?

[Lord Sassoon]

My Lords, the first thing to understand is that the UK is not part of the stability mechanism that the eurozone is putting in place, and we will not contribute to specific bailouts. On the other hand, the eurozone takes about 40 per cent of our exports and it continues to be the principal interest of the UK Government to make sure that the eurozone and the whole of the EU prosper and grow, to the benefit of our own economy.