G20

Margot James Excerpts

Monday 7th November 2011 Commons Chamber

[The Prime Minister]

The European Central Bank is independent; no one is able to tell it what to do. There is a very strong case for saying that the eurozone institutions, including the ECB, need to do more to stand behind their currency and their currency zone, but we have to understand why the Germans feel as strongly as they do, and it is partly based on their history and what they feel went wrong in the 1920s and ’30s. None the less, I think that the argument that the ECB and the eurozone institutions need to do more is right.

[Margot James (Stourbridge) (Con)]

Does my right hon. Friend agree that if we were to listen to Labour and ease our deficit reduction strategy, our interest rates would soar towards Italian levels and away from German levels, and will he explain to the British taxpayer what that would be likely to cost in increased interest payments?

[The Prime Minister]

My hon. Friend makes an important point. It is not just a question of the extra interest payments the Government would have to pay, although that would be pretty crippling for the taxpayer; it is also the fact that those higher interest rates would affect business investment and the mortgages that people pay. We could see a really bad effect on households and business as well as on the Government finances.