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Volume 759: debated on Thursday 12 February 2015


Asked by

To ask Her Majesty’s Government what proposals they intend to put to today’s European Council summit on the future of deficit reduction policy in Greece.

My Lords, a stand-off between Greece and the eurozone is the greatest risk to the global economy. We urge Greece to act responsibly, and it is important that the eurozone has a better plan for jobs and growth. The best way to insulate the United Kingdom economy from any such instability is to stick to our long-term economic plan, with the United Kingdom forecast to be the fastest-growing major advanced economy in 2014.

I thank the Minister for that Answer. I hope he will agree that there is no need for HMG to be deterred by yesterday’s set-back. According to his Answer, there is still now ample opportunity for HMG to have a leading role as a leading member state of the EU in reconciling the huge sacrifices made by Greece—with eight parliamentary votes in favour of massive austerity—with the continuing need for eurozone cohesion and discipline. Will he promise that the Government will make an extra input into this effort?

My Lords, the settlement of the issue is primarily for the eurozone and Greece. However, we note that yesterday there were intense discussions among eurogroup Finance Ministers. According to the chairman, the Dutch Finance Minister, Mr Dijsselbloem, they progressed with intense discussions which covered a lot of ground. We remain hopeful of a positive outcome.

My Lords, has my noble friend seen the remarks of the former chairman of the Federal Reserve Bank in America, Mr Alan Greenspan, in which he points out that any bailout proposals or any other changes for rescue and so on are not likely to provide a long-term solution to the Greek problems so long as they are based on an exchange rate in the eurozone? Is it not inconceivable that Greece will become competitive at the present exchange rate, and that therefore the best negotiations that could take place would be on an orderly withdrawal of Greece from the eurozone?

My Lords, the Government’s view is that:

“If Greece left the euro that would create real instability”.

That statement was made by the Chancellor, who went on to say that, frankly, a Greek exit would cause ructions. We obviously take seriously anything that Alan Greenspan says but we remain hopeful that there can be a settlement, because it would be bad news for the United Kingdom and certainly bad news for Europe if no agreement could be reached within the eurozone.

My Lords, does the Minister not understand that the proper response to the desire for growth and improving jobs is a capital markets union, which is being supported by our own Commissioner, Jonathan Hill—the noble Lord, Lord Hill—and a recognition that Juncker’s plan for investment in Europe applies to all 28 members of the European Union, including the United Kingdom?

My Lords, the specific question of the settlement of the Greek position is clearly a matter for the eurozone, and the United Kingdom is not a member of that group. We remain of the view that our best plan for the economy is to insulate us as far as possible from what is happening within the eurozone. That is why we have the fastest-growing economy in the G7—both the OECD and the IMF project it to be so. It is also why we have the highest level of employment ever, with low inflation and low mortgage rates. That is the way to proceed.

As the noble Baroness, Lady Anelay, did not answer my question on 3 February in a similar debate, may I put it slightly differently to the noble Lord, and following his answer to the noble Lord, Lord Higgins? Would it not be in the long-term interests of Greece, including her ability eventually to repay her debt, if she were to abandon the euro and adopt a devalued drachma supported by the IMF? If the resultant success of Greece encouraged Portugal and others to follow suit, might that not lead to the collapse of whole unfortunate project of European integration, and would that not be rather a good thing? The question the noble Baroness refused to answer is,

“what is now the point of the European Union and its … euro?”.—[Official Report, 3/2/15; col. 541.]

My Lords, the noble Lord’s crusade is well known but we do not associate ourselves with that in any way at all. I am here to answer not for the long-term interests of Greece but for the long-term interests of the United Kingdom, which are very much about having a settlement of this question within the eurozone.

My Lords, according to the PA:

“David Cameron will tell his Greek counterpart Alexis Tsipras he needs to end the stand-off with the eurozone amid fears the uncertainty could damage the British economy”.

Is that real? The Prime Minister of Greece has a crisis on his hands and has really big problems. Does he need to be lectured about the problems of the British economy? Surely our Prime Minister should be going there with constructive ideas to help Greece, not to lecture it on getting its own things sorted out. Is that not another example of the attitude to Europe—standing on the sidelines, wringing hands?

First, I would not believe everything you see as speculation. The Prime Minister is going there with the very clear message that a settlement on this issue is in the best interests of the United Kingdom and the rest of Europe. The noble Lord talks of the problems of the British economy; we would have problems if we were back in the old days when we had the worst financial crisis since World War II and the largest deficit since then. I am not sure what problems he is referring to. The fastest growth of any major country in the G7? The highest employment rate ever? The lowest inflation or lowest mortgage rates? That is a success story.