Part of Oral Answers to Questions — Defence – in the House of Commons at 4:32 pm on 10th October 2011.

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Photo of George Osborne George Osborne The Chancellor of the Exchequer 4:32 pm, 10th October 2011

As I have said, I was always one of those who said that Britain should not join the euro. I worked alongside my right hon. Friend for Richmond

(Yorks) (Mr Hague) when he was Leader of the Opposition, and helped him to write many of the speeches that set out that case. Although the shadow Chancellor keeps talking about the important role that Mr Brown played in all that, I do not recall lots of passionate speeches about why Britain should not join the euro; but no doubt he was doing his work in private.

Let me say this about the Greek situation. If Greece were to leave the euro, there would be a balance of payments crisis. Greece does not have a primary balance, so there would automatically be a need for a huge international programme. The idea that leaving the euro would get it out of needing international assistance, or out of the clutches of the International Monetary Fund, is just fanciful, because it would need such a programme. There would be a balance of payments crisis and there would probably be runaway inflation as well, which would wipe out any competitiveness gains.

I think that we are depicting a nirvana of Greek exit from the euro which does not exist. Greece is in a very difficult position, and it needs to work through its problems.