Eurozone

Michael Connarty Excerpts

Monday 10th October 2011 Commons Chamber

[Mr Osborne]

Yes, I can confirm that. Moody’s was explicit in saying that that was not a reflection of financial conditions in the UK or the financial strength of the Government. Rather, it was a recognition of the fact that the current Government are trying to move away from the taxpayer either implicitly or explicitly standing behind our largest banks. That is sensible policy, and I hope it commands support on the Opposition Benches.

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

Returning to the eurozone rather than our domestic concerns, I agree with the Chancellor about the difficulty that would arise if Greece were to leave, or be forced out of, the eurozone. Although he will not tell us his policy, will he give us an estimate in respect of the secure fund for the eurozone? It has been said that €2,000 billion would be required for that fund. How great a contribution from the International Monetary Fund and the World Bank is the Chancellor going to argue for in order to bolster the ability of the eurozone to see itself through the crisis and save Greece from being pushed out?

[Mr Osborne]

We are not arguing for an increase in IMF resources as part of the Greek programme, but I did make reference to the broader resourcing of the IMF. That is increasingly an issue because of its flexible credit lines to Poland and Mexico—neither country is in the eurozone, of course. The truth is that after taking into account the IMF’s existing commitments and the buffers it needs to maintain in order to operate as an institution, it does not have a huge amount of resources—although by most people’s standards it does have a huge amount, of course. Its resources amount to about €400 billion, but that is not as large as some people imagine. There is therefore a debate about whether to try to increase the IMF’s resources, but we are not discussing a possible increase of resources in the IMF programme to Greece.