Euro Area Crisis: EUC Report — Motion to Take Note

Part of the debate – in the House of Lords at 7:59 pm on 21st May 2012.

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Photo of Lord Davies of Oldham Lord Davies of Oldham Shadow Spokesperson (Transport), Shadow Spokesperson (Treasury), Shadow Spokesperson (Wales) 7:59 pm, 21st May 2012

I was not going to be excessively critical of intellectuals. I accept what my noble friend said but I translated it to the political because that is what this House is here to do. We are not a debating Chamber; we are the second House of a very significant Parliament in a Europe that is faced with the most colossal difficulties. That is why we have to address ourselves to the issues.

I greatly applaud the work of my noble friend Lord Harrison. When the report was being drafted, things were not quite as critical as they have developed to be over the past two to three months. Nevertheless, my noble friend and his report clearly reflect the difficulties and tensions faced by the committee in producing a response to the great challenge of the crisis in the eurozone.

Let us get one thing absolutely clear. The reason we cannot walk away is that Britain has nowhere else to walk. Robert Chote is the chair of the OBR, in the work of which not just the Chancellor but the Minister in this House invest so much credence. What does he say? He says that we face a catastrophic situation if Greece moves out of the euro; we face catastrophe as far as the eurozone is concerned. The recession will go on for several more years. There will be deflation. Unemployment will rise from 8% to 11%. Therefore, we will be in a situation in which our own people will suffer severely because of this development. That is why the one thing that the British people will not accept-nor do I see any reason why other Europeans should accept it either-is politicians throwing up their hands and saying, "This is beyond us". We may have limited intellectual concepts to get beyond Keynesianism or monetarism as an economic theory for the future, but we must put together some kind of strategy for improvement. Without that, we renege on our obligations to people.

The noble Lord, Lord Dobbs, says that the people will decide. Let me say that people who have lost trust in their politicians can reach some very dramatic decisions. We possibly see it in Greece at present. What if the British political community also began to reflect that we have no means of protecting our people in this crisis? A total calamity would be visited upon us and we would deserve it. Of course, I respect how difficult these issues are. I know that the Minister will be challenged in his response to this report. However, it is essential that we recognise that we must look for some steps forward.