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Volume 762: debated on Wednesday 1 July 2015


Asked by

To ask Her Majesty’s Government what part they have played in discussions and negotiations regarding the Greek financial crisis.

My Lords, these discussions are primarily a matter for Greece and for the euro area. However, it is in Britain’s interest to see a stable euro area, and the Government maintain regular contact with euro area member states and other European and international partners on economic issues. As the Chancellor has said, we should not underestimate the impact that a Greek exit from the euro would have on the European economy and the knock-on effects on us.

May I also take the opportunity to correct an error that I made in answer to a question after the Statement on Monday? I said that the UK’s share of IMF funding was 15%, whereas it is around 4.5%. I apologise to the House for that error.

My Lords, in light of that reply, will my noble friend urge the Chancellor to play a more active role in this matter? It is fortunate that we are not members of the eurozone; however, we have a definite interest in what the eurozone is doing. Not only are we contributing to the bailout through the IMF, but it crucially affects our own economic recovery. The politics of this have become unbelievably acrimonious and complicated, but the economics are very clear. Greece is locked into an uncompetitive exchange rate and it will be condemned to endless financial crises, bailouts and austerity until it leaves. Therefore, will the Chancellor seek to do all he can with our European partners to ensure an orderly exit? In particular, will he reject the view, apparently expressed this morning, that if Greece leaves the eurozone it has to leave the European Union, which would push it into Mr. Putin’s arms? Will he also say that the finance that would otherwise be available should be used to ensure a smooth transition to a more competitive exchange rate for Greece?

My Lords, the Chancellor has been very clear that we have exposure to the eurozone and it is an important market, so we cannot be in any way complacent about the Greek situation. However, it is a eurozone matter and the Chancellor will not involve himself directly. He talks regularly to fellow Finance Ministers and to the heads of the ECB and the Commission; indeed, he said in his Statement the other day that he had spoken to them in the previous 48 hours. The Governor of the Bank of England also made the point that the ECB stays in regular contact with the Bank. Regarding my noble friend’s suggestions as to what the Chancellor should tell the eurozone leaders, I can pass on his comments, but I think the Chancellor is very keen to leave them to deal with what is their problem.

May I ask the noble Lord to go rather further than he did in answer to me on Monday? In the course of the discussions he referred to with our eurozone partners and the IMF, will the British Government be using what influence they have in favour of a revival of the package that Mr Tsipras turned down so petulantly the other day, if the Greek electorate vote yes in the referendum on Sunday? This issue can hardly be avoided in any such discussions. Will the Minister tell us frankly the Government’s position on the matter?

The Chancellor is very clear that he is not going to make that judgment in public. He thinks that the eurozone negotiations should be left to the eurozone parties.

My Lords, on the hopeful assumption that Greece’s financial crisis can be resolved, what constructive role can the Minister assure us the UK Government will take as a leading member of the EU—if not of the eurozone—to help resolve Greece’s economic crisis, and to help it to build a sound and sustainable economy? Can the Minister assure us that it is in our interest, as well as Greece’s, that the UK remains a leading member of the EU?

The Chancellor is not going to tell anyone what they should be doing, but of course we want the economic situation in Greece to get better, not least for the benefit of the Greek people. That is not a simple matter and it will not happen any time soon, but we are not going to be drawn on advising the Greek people on how they should vote in the referendum, or on what course they should take.

My Lords, discussion of this issue has, for obvious reasons, focused on economic and financial issues, but does the Minister agree that what is going on in Greece is likely to have far wider repercussions, not least for European security in the eastern Mediterranean? This is an issue for us, just as much as for the eurozone countries; therefore, such discussions cannot just be left to the eurozone.

My Lords, I completely agree with my noble and gallant friend. As the Chancellor said, we hope for the best but we prepare for the worst. That certainly includes some of the security issues that my noble and gallant friend has mentioned.

My Lords, could my noble friend the Minister have another crack at my noble friend Lord Higgins’s Question? Does he agree that it would be in Greece’s interest if it had a flexible exchange rate that reflected the economy and created a more competitive economy in Greece?

I am absolutely not going to tell the Greek Government how to deal with their economic situation. It is certainly not my place.

My Lords, if Her Majesty’s Government can play only a limited role in the resolution of the crisis, at least they can do something on behalf of British citizens in Greece and those intending to go to Greece. The Minister gave a very limited answer on Monday to the question of whether our embassy in Greece would be strengthened and help given to those who are bound to find things difficult in getting money from the stricken Greek banks.

I mentioned on Monday that we will increase the resources available if necessary, and the Foreign Secretary had agreed that. The Foreign and Commonwealth Office has updated its travel advice and we stand by to do everything we need to do to help British citizens go to Greece and enjoy their holidays. We think that it is good for Greece that they continue to do so.