Eurozone Crisis

Michael Connarty Excerpts

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

As I have said to the House, Britain should not be part of eurozone bail-outs. We got ourselves out of—[Interruption.] I am answering the question. On coming to office, on the Sunday after the general election, the Labour Government committed us to being part of an EU bail-out of the eurozone. We have now got ourselves out of that, which is very important. We are also not contributing to the eurozone bail-out of Greece, which has just increased in size; nor are we going to contribute to any special purpose vehicle or fund that might be created. We are absolutely clear about that. When it comes to IMF resources, like every other country in the world that is a member of the IMF, including China, Thailand, Guatemala, the United States of America, Canada and Brazil, we of course contribute to its resources for the 53 programmes that it is currently carrying out across the world, and we will continue to do so. However, we are not prepared to see—and the articles of the IMF do not allow for—money from the IMF being put into a special purpose vehicle. So I think that the position is pretty clear.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I would think much more highly of the Chancellor if he would actually admit that one reason that the banking system in the UK is not under threat is because the last Government and the people of this country bailed out the banks.

The right hon. Gentleman will recall that, as Hansard will show, I asked him last time about the possibility that they would require a £2 trillion fund, which most economists say they will, and that the so-called haircut—more Sweeney Todd than Vidal Sassoon—would be 60%. Surely we must be in the IMF and involved in funding through the IMF; otherwise the big bazooka that the Prime Minister has talked about will say “Made in China”.

[Mr Osborne]

I am happy to acknowledge that the previous Government recapitalised the British banks. They were obviously under enormous duress at the time—[Interruption.] It is simply not the case, as the hon. Member for Nottingham East has just suggested, that the Conservatives opposed that. We supported it at the time; indeed, we were advocating it in advance of it happening. However, I completely recognise that it was a difficult decision for the previous Government to take.

On the question of the size of the fund, of course there are those who would like it to be even larger. We should welcome the significant progress that has increased its size severalfold to, potentially, around €1 trillion, which is a significant sum. The hon. Member for Linlithgow and East Falkirk (Michael Connarty) also asked an interesting question about what was happening during our time as Members of Parliament to the balance of economic force and power in the world. I suspect that we are going to spend many years talking about that in the period ahead.