My Lords, the eurozone crisis is having a real impact on economic growth across the European continent as well as in Britain. Eurozone leaders have to do whatever is necessary to stand behind their currency and resolve the crisis. However, these decisions must be made in conjunction with the democratic wishes of people across the eurozone.
I thank my noble friend for that reply. Does he agree that conditions in several eurozone countries—huge rises in unemployment, particularly youth unemployment, and significant falls in living standards—are resulting in the rise of right-wing parties in particular, as seen in the most recent democratic elections, and putting democracy under strain? Will he tell the House whether the Prime Minister, when he next goes to the European Council, will support pro-growth measures, including additional funding for the European Investment Bank if necessary, so that European countries, as well as the UK, can get back on the right track?
My noble friend is quite right: youth unemployment is a blight and a very serious issue everywhere, not least in this country as well as throughout Europe and many economies in the Middle East. The problem is general. My noble friend raised two points. She mentioned the European Investment Bank and the possibility of expanding its activities. This is a possibility and may well be discussed. As a broader point, she posed the question of austerity versus growth, as though they were opposites. The reality is that this polarised choice is a complete myth. Unless we can control our budgets effectively and run them with fiscal discipline, there will be no growth. There will instead be still further inflation, undermining the very growth that we want to see. A balance must be struck. It is not a choice; it is a balance.
On this side of the House we welcome what the Minister said about being open to increased resources for the European Investment Bank. However, will he tell us whether the Government broadly agree with the growth agenda being pursued by the new French President, François Hollande? Does he draw from the spate of election results that we have seen the conclusion that austerity in the eurozone is reaching its limits? Given that growth in the eurozone was larger than ours in the past year, will he draw that lesson for economic policy at home?
Neither the noble Lord nor I know how the discussions between the new French President and the German Chancellor will work out. However, he has read the newspapers, as I have, and it is fairly clear that some aspects of both arguments will have to be taken into account. That will demonstrate the very point that I just made to my noble friend. The picture that has been painted of either austerity or growth is completely unrealistic. The reality is that there will have to be the discipline on which the German people and Government have led very strongly, and in which they believe for strong reasons connected to their history, combined with the necessity to erode youth unemployment and to create and restore confidence in investment. This is a balance that must be struck. We certainly hope that the leaders of France and Germany will, in their wisdom, strike the right balance and maybe convey to the people of Greece the necessity for this balance, from which there is no escape. There is no unrealistic choice between going one way or the other—you cannot.
I can give an assurance that there is no intention of spending public money on precisely the eurozone problems that have to be sorted out by the eurozone Governments. Nevertheless, the world economy will be affected by the success or failure of these policies in Europe, and in supporting aspects of the world economy we are regular contributors to the IMF and have worldwide responsibilities. It may well be that we will contribute to maintaining those responsibilities.
I am afraid that I have absolutely no idea about a statement of that kind. I do not know where the noble Lord read it. Perhaps I may find it later. If it was said by the Prime Minister, I am sure that it is true but I do not think that it was.
My Lords, I thank the Minister for once again showing HMG’s resolute determination to help the eurozone leaders in solving this crisis and for ignoring the flimflam from the anti-Europeans. But, without giving instructions of course, would he give some friendly advice to the British press to restrain and reduce their hysteria on this subject of the eurozone crisis at a time when the United States 16 trillion dollar irreducible debt system, which is facing national default yet again, is totally ignored by the British newspapers?
It is not for me to advise the media on their priorities but clearly the eurozone crisis could have considerable impact on all economies in the region and certainly on the United Kingdom. We are right to be concerned about it and the media are right to examine it and to bring home—through their experts and commentators, in addition to the expertise already in this House—that if there are further difficulties and the problems in the eurozone are not resolved, it will certainly hurt the British economy as well. That is inevitable.
My Lords, as regards those who are pleading for not one single cent more of British money to be spent on sorting out the problems in the eurozone, will the Minister bear in mind what the consequences might be if a newly elected Greek Government after the next elections wish to tear up all the agreements made, which would almost certainly provoke an exit from the eurozone leading to extraordinary problems for Greece? But the most important point, which has not been much discussed, is whether we are prepared to consider seriously the impact of a failed state in the Balkans and the probability that this will provoke a resurgence of nationalism in the region. It is the Balkans that we need to think about and not just Greece.
The noble Lord is right that there are serious political implications. He mentions the Balkans. One only needs to think of the problems facing Cyprus, for instance, and the whole south-eastern region of the Mediterranean. Further instabilities there on top of all the existing instabilities would certainly be against our interest. These things must be examined very carefully. But that is a different question from who steps forward with the financing for a problem which is strictly for the European countries to sort out and on which they are working now. But at the political level we fully recognise, as I am sure everyone does in this House, that serious political developments are ahead if the whole stability of the eurozone is not secured one way or another.