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EU Economy

Volume 538: debated on Tuesday 17 January 2012

5. What assessment he has made of the implications for his Department of economic conditions in the EU. (89809)

16. What assessment he has made of the implications for his Department of economic conditions in the EU. (89820)

The crisis in the eurozone is having a chilling effect throughout Europe, which is why this Government are arguing vigorously within the European Union for action to promote growth by deepening the single market, boosting trade and cutting red tape.

I thank the Minister for his response. Does he agree that it is important that policies are enacted at EU level to encourage economic growth? Measures designed to help drive sustainable economic recovery, such as exempting micro-businesses from the burden of red tape, would have positive implications for all Government Departments across the 27 member states, including his own.

I agree completely with my hon. Friend, which is why the agreement at the December European Council for an exemption from European regulations for micro-business was particularly welcome, especially as that will apply not only to new European legislation but will prompt a review of the existing acquis in respect of micro-businesses.

Can the Minister assure the House that the principles of the Prime Minister’s veto will be followed through, and that any attempt by the EU to impose a tax on this country’s financial services will be vigorously resisted?

A financial transfer tax would require unanimous agreement by all 27 member states, which is something that the single market Commissioner, Monsieur Barnier, has confirmed to me. The Prime Minister has made it clear that we would not agree to the imposition of such a tax.

What assessment has the Minister made of the impact on the EU economy of the recent behaviour of the Hungarian Government? Has he reminded that Government that there is an expectation that all EU members adhere to normal democratic norms?

We are certainly concerned about any developments in other EU member states which might lead to even greater economic instability than we currently see. I have talked about the concerns expressed in a number of quarters with regard to Hungarian legislation with my Hungarian opposite number and with the Commission. As the right hon. Gentleman may know, the Commission is due to release the results of its assessment about now. The Hungarian Government have said that they will consider carefully and constructively the comments that the Commission makes, whatever they are, and I believe that that is the right way forward.

It has been reported that the Foreign Secretary advised the Prime Minister before the European Union summit in December that if it is a choice between keeping the euro together or keeping the Conservative party together, it is in the national interest to keep the Conservative party together. Can the Minister confirm that the Foreign Secretary regards the unity of his party as more important to the national interest than the success or failure of our largest trading partner?

I really had hoped that the hon. Lady would have something a bit better to say than that. What the Government are determined to do is to support our allies and neighbours in the eurozone in their efforts to restore economic stability to their currency union, and also to press for the measures to promote job creation and economic growth which the whole of Europe desperately needs. We are not prepared to take lectures from the Labour party that signed away £7 billion of the British rebate and denied the people of this country the referendum on the Lisbon treaty, which it had promised.

Does the Minister agree that the gloom about the consequences of an early break-up of the euro has been greatly exaggerated, bearing in mind the very positive economic experience for eastern European countries from the break-up of the rouble zone—very similar to the euro—in the early 1990s?

I have to say that it is unusual to find my right hon. Friend looking to the example of the former Soviet Union for inspiration. We have looked across Government very carefully at what the consequences of a eurozone break-up might be, and one of the key differences between now and 20 years ago is that the economies and the financial systems of Europe are much more closely interlinked now than they were then. It is certainly our judgment that it would be damaging to the British national interest were a collapse of the eurozone or a prolonged recession in the eurozone to take place.

The credit ratings of a number of eurozone states have been downgraded this week. The bail-out fund is now considered to be far too small to do its job. Mario Monti, Italy’s unelected Prime Minister, said yesterday that there would be a backlash against austerity unless Germany provides more support to Italy. The crisis becomes deeper every day. Is it not the case that recovery for many of those countries can come only when they can recreate national currencies, devalue and start to grow again?

With respect to the hon. Gentleman—his views on the subject are utterly consistent and I respect them—that is a matter for the peoples and Governments of those sovereign countries. From our point of view, what is needed is for the eurozone countries to implement in full the deal that they agreed to in October last year, and for Europe collectively at 27 to move forward urgently with deepening the single market, boosting global trade and cutting red tape and regulation on our businesses. That is the way to growth and jobs.