Eurozone Crisis

Tony Lloyd Excerpts

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

My hon. Friend’s first point is a good one. The write-down of Greek debt ultimately has an impact on people who invest in Greek debt, either directly or—as is more likely for the general population of this country—through their pension funds and the like. Thankfully, British institutions were not that heavily exposed to the Greek banking system and economy, compared with other European countries such as France and Germany, but he is right that people will have taken losses. In Britain, the institutions that he mentioned all provisioned for Greek loss many months ago, so it will come as no shock to them. More broadly, he asked about confidence in the stock of debt, which is of course one of the challenges. The first loss guarantee that the agreement talks about is only for newly issued debt. We will have to see how the special purpose vehicle works as well, but in general, if there is confidence that there is a sufficient set of mechanisms in place to stand behind the euro and countries that are in trouble, that will also increase confidence in the stock of debt.

[Tony Lloyd (Manchester Central) (Lab)]

The Chancellor might be surprised to know that if limited treaty changes are necessary to set up the inner 17, there would be support from the Opposition Benches for the limited changes needed to protect Britain’s interests and for the capacity to build a coalition among the 10 non-eurozone members. However, a very real political question is whether the Chancellor and the Prime Minister will be able to withstand the pressure from their Back Benches for much more fundamental reform of the treaty.

[Mr Osborne]

I would hope that we would persuade all parties in this House. There is certainly strong agreement on the Conservative Benches that we want to rebalance the responsibilities and repatriate some powers. The Liberal Democrats and the Liberal Democrat leader have talked about rebalancing responsibilities—he did so earlier this week. [Interruption.] The shadow Treasury Minister, the hon. Member for Nottingham East (Chris Leslie), seems to forget the position set out by his party leader this weekend. When he was asked whether he thought that Brussels had too much power, he said no. That is the official position of the Labour party going into these negotiations. I know that Opposition Members look pretty glum about it, but that is what the leader they chose—or rather, they did not choose—has done for them.