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 would say, not at the end of this day. We have so much to do before we could even begin to prepare a referendum and the question that that would represent in realistic and proper terms to the British people. I will not rule it out altogether. We are accustomed to referenda in certain circumstances. You cannot talk to the people in terms of "We are giving all power to you for you to take this decision because we as politicians have not got the faintest idea what the question should be or how it should be answered". That is what I am arguing against.

I am confident of the fact that European politicians will take important steps to make progress out of this situation. What will they do first? Let me be clear, we should not visit upon the Greeks the well constructed animosity that infects all our right-wing press at the present time. The Greeks are such a small fraction of the European economy that they are not a threat to anyone. Their loss is marginal. It is certainly a marginal aspect as far as our exports are concerned. But the Greek withdrawal from the euro would represent not one country having left the euro, it would be a recasting of the nature of the euro. The euro would come rather more closely to some kind of a currency regime from which some could defect at a time. But as to the consequences, Greece would be just the first of the victims. Then the pressures would inevitably be presented on the next weakest currency. We have already got pretty well a checklist of how that succession of activity would take place. It is certainly the case that the Greeks did not create this situation. We should have some respect for a nation which has such a significance in its past for European society. But the Greek withdrawal from the eurozone would create enormous difficulties for all. The contagion would merely spread.

What is to be done in these circumstances? It is clear that we have to play our small part. Because we are not part of the eurozone, we are on the margins of this exercise. We are even more on the margins because the Prime Minister walks out in a huff or presents a veto whenever things do not go right. We are not quite sure what has gone wrong. As the noble Baroness, Lady Williams, indicated, we never got the facts of the basis of such a decision. But the Prime Minister is good at chiding nations from the sidelines, giving good advice and lecturing others while not being conspicuous by his success at home. If these countries are being told to pursue a strategy in which they have to improve their growth prospects, by heavens, the Prime Minister should examine more closely the growth position of the UK economy in its double-dip recession through his and his Chancellor's actions since they have been in Government.

So it is quite clear that we will look to others in Europe to present some dimension of the solution to this position. Does it mean that the Germans will have to make additional sacrifices, which it is quite clear that their chancellor is not prepared at present? That will happen only if the consequences of doing nothing are far worse. That is exactly how they are beginning to look. When this report was drafted only three months ago, this discussion could be conducted in fairly normal political language, but we are close to talking the language of cataclysm at present-and of course it changes the perspective of the Germans on this, not least because, after all, the Germans also need friends. In fact, they need the French, their direct allies who have helped to build the European project, who under Monsieur Hollande are taking a somewhat different view on the next stages.

It is quite clear that the eurozone has to take actions itself. We cannot play a major part. But it is the case that 40% of our exports go to Europe. It establishes the British economy in a weak position, because we are related to the euro countries in those terms; there is no ready alternative. If you ask any of our major companies or anyone else concerned with export trade, they do not turn round and say, "Because the eurozone's in such trouble, we're looking forward to such wonderful opportunities to challenge the Chinese and the Indians and others elsewhere in the world". They do not say that at all. They say that we should do something about sustaining the most crucial market that we have-the eurozone countries.

I am quite sure that the Minister's response to this debate will be expressed in very different terms to mine, but I hope that at least what I have done for him is to help to disperse the rhetoric so that we can concentrate on what practical politicians will have to do to get us out of this situation.


Mr Raymond Neal
Posted on 22 May 2012 11:59 am (Report this annotation)

Exports to the Europe according to Lord Stoddart and I quote:-

Regarding exports, 18 percent of Britain’s exports go to the USA— only 8 percent to Germany! Pro-EU opponents say that 45 percent of our exports go to the EU, go to Rotterdam. But the truth is that this 45 percent goes through Rotterdam, which is an “inter-port,” on its way to other non-EU export destinations, including, for instance, Britain’s Commonwealth network, etc.