Eurozone Crisis

Lord Pearson of Rannoch Excerpts

Tuesday 17th January 2012 Lords Chamber

[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 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.

[Lord Pearson of Rannoch]

My Lords, is it not now clear that there are really only two ways forward—either full fiscal union, which does not look as though it will be accepted by the peoples of Europe, or a return to national currencies? On the latter alternative, have the Government seen the research from Bank of America Merrill Lynch which suggests that an orderly return to national currencies need not be nearly as traumatic as the political class would have us believe?

[Lord Sassoon]

My Lords, there is a whole range of views about the effect of the eurozone breaking down in any way. All I can say is that 40 per cent of our trade goes to Europe, and we want to see a strengthened and healthy eurozone. That is fundamentally in the interests of the UK. A crisis in the eurozone presents the most imminent threat to growth in this country.