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EU: Economic and Financial Issues

Volume 736: debated on Monday 12 March 2012


Asked by

To ask Her Majesty’s Government when they will next hold high-level talks with their European Union partners on economic and financial issues.

My Lords, the Government hold high-level talks with all our European Union partners on economic and financial issues at the regular European Union Economic and Financial Affairs Councils. The next Economic and Financial Affairs Council—ECOFIN—is taking place tomorrow, Tuesday 13 March.

I thank my noble friend for that Answer and wish him well for that meeting. Can he explain carefully to the House why, since we had achieved—with some skill—all our objectives on the innovation, investment and growth programme of the EU at the recent meeting of all the member states, we did not therefore show solidarity by signing the fiscal compact treaty as well, alongside every other member apart from the Czech Republic?

My Lords, the fiscal compact intergovernmental treaty was discussed at the European Council on 8 and 9 December. As has been discussed on a significant number of occasions, the UK did not get the safeguards it was looking for and is not a party to that treaty, which is why we did not sign it in the fringes of the European Council on 1 and 2 March.

My Lords, will the noble Lord accept my congratulations to the Government on following the previous Government’s agreement not to join the euro? Nevertheless, would it not be as well to admit that because of that, unfortunately, the whole question of the survival of the euro is discussed mainly among eurozone Finance Ministers? Why will he not admit it?

Well, I have not been asked the question in those terms before. It is for the eurozone members to bear the brunt of sorting out the eurozone. That is exactly what they are getting on with doing, which is why we welcome the fiscal compact intergovernmental treaty as a necessary step towards the remorseless logic that with currency union comes much closer fiscal union. We keep close to it. Meanwhile, we are working with many like-minded states on an ambitious pro-growth agenda, which is what Europe also desperately needs.

My Lords, the noble Lord mentioned ECOFIN, but tonight there is a meeting of the 17 Finance Ministers of the eurozone. Will the UK be represented at that meeting, which is discussing the size of the firewall, and if so, what line will it be taking?

No, my Lords; the UK will not be represented at the euro group meeting later today because we are not in the euro group. On the other hand, there will be a debrief of Ministers before the formal ECOFIN starts at breakfast time tomorrow.

The Minister referred in reply to the original Question to the failure to satisfy all our negotiating points. Is he yet in a position to share with the House what specifically were the negotiating objectives and which ones in particular are not satisfied by the financial compact?

My Lords, I really cannot add anything to the previous discussions we have had on a number of occasions. It is nice to have the question asked by a different noble Lord this time, but I cannot add anything to what has been said before.

My Lords, reverting to the original Question, would it not be extraordinarily hypocritical and rather puzzling to the British people if we were to sign a fiscal compact to which we had not the slightest intention of being party?

My Lords, a Written Ministerial Statement was issued earlier today about the ECOFIN meeting in which it was argued with respect to the financial transaction tax that,

“the proposal will have significant negative impacts on jobs and growth”.

No evidence is provided for that statement. Perhaps the noble Lord can tell us what is the negative impact on jobs and growth of the current stamp duty on share transactions?

I believe that the effect of UK stamp duty on jobs and growth is negligible. The European Commission conducted its own assessment of the effect of the financial transaction tax, which is what I think is relevant, and the numbers that have been produced by others indicate the range of negative impacts. We think that it makes no sense to introduce a financial transaction tax on the basis of Europe going it alone without the rest of the world being there.

My Lords, I am delighted that the Minister has tired of the Kabuki play in which he and I have been indulging for some weeks, and I will not continue that now—

That seems to be popular in an unusual quarter of the House. Can the Minister perhaps tell us how, the previous strategy having failed on 9 December, the Government will set about protecting Britain’s national interests in the area of financial regulation in the current situation in which those proposals are as dead as a dodo?

My Lords, the strategy did not fail on 8 and 9 December. We did not sign up to a treaty which it would have been wholly wrong for the UK to sign up to on the terms that were offered. What is happening now and is very positive is that we are working with a significant number of like-minded countries to drive forward the growth agenda. My right honourable friend the Prime Minister was one of 12 Heads of Government who signed up to a letter very much led by us. We have regular meetings with 16 like-minded countries to define and drive forward the pro-growth agenda.

My Lords, perhaps the Minister will enlighten us on one thing. Given that the Liberal Democrats are traditionally Europhiles and the Tory party is at present packed in both Houses with Europhobes, how can we get a rational approach to anything to do with the European economy at all?

My Lords, I believe that the coalition is driving forward our agenda on Europe with great coherence. As I have explained, the UK is leading the way not just on the single market and competitiveness issues but issues including Iran, Burma and many other areas on which we are very much at the forefront and lined up with many of our European partners.

My Lords, when will our estranged political class understand that the euro’s problems are embedded in its construction and cannot be cured by throwing yet more money and sticking plaster at the problems of Greece and others?

My Lords, as I have already said, there is a remorseless logic that has to take monetary union towards closer fiscal co-ordination, if not union. That is what the latest intergovernmental agreement is one step towards.