Eurozone Crisis

My Lords, it gives me particular pleasure to add words of congratulation and thanks to the noble Lord, Lord Wolfson of Aspley Guise, on his quite stunning maiden speech. I agreed with a lot of the details of his analysis and I look forward to him making not just the occasional speech, but many speeches in this place. He can rest assured that he will be listened to with great care. He mentioned the great Isaac Wolfson from the old days. Some years ago, in the Cholmondeley Room, I had the honour of hosting a fund-raising effort for the Wolfson Centre on the coast in Israel, which specifically helps poor Israeli and Palestinian families. It was expanding its facilities and we raised a lot of money on that night. It was a great honour to do that and I can assure him that his antecedent’s name was mentioned on many occasions by subsequent speeches to mine. I thank him very much for his interesting suggestions. I suggest that the Lords would take a different competition, because what he is suggesting might be too demanding for other people, but I wish him well with that project. I would not necessarily agree with the conclusions, depending on which way they went. I thank the noble Lord, Lord Lamont, very much for initiating this debate today, as others have done. In the early 1990s, he was driven out of the exchange rate mechanism, with a lot of searing pain, I am sure—it was a very deep and bitter experience, with which I have great sympathy; it was a very painful moment for the United Kingdom. At the time, I was chairman of the European Movement in Britain, working with other figures in the European Movement on the continent, including Francois Poncet, the son of the famous ambassador in France who built up reconciliation between Germany and France with Konrad Adenauer. I also worked with the chairman of the European Movement of the whole Community, Giscard d’Estaing, who had a reputation in the press in France and elsewhere for being very pompous as a head of state, but I did not find that at all. I found him very amusing indeed and we had many intellectual discussions, because he also used to write books that were very difficult to understand. We discussed whether it was Rousseau or Voltaire who had come out with the immortal utterance, which I always remember and use occasionally, ““La superstition met le monde entier en flammes. C’est seulement la filosofie qui peut les éteindre””. We decided it was Voltaire, and I think that is still right, but there is no bet on it. The debate in Britain has been far too much on Europe and, because there is so much anti-Europeanism in this country, it is a poison that is cascading through many layers of this country, much to our detriment. There is too much superstition here and not enough philosophy and wisdom about our relationship with the European Union. I am very glad, none the less, that the Government have proceeded from the superficial triumphalism of a few weeks ago about the terrible woes of the European Union, ““We told you so with the currency and the euro. Look what’s happening. We have no intention of being contaminated by that. Thankfully we are not in the euro. What a good idea it is that this country has its regular habit of devaluations””. I think we have had at least six or seven formal and informal devaluations in the marketplace since the war. That is a very congenial fix to get into. Since then, the Government’s attitude has changed. I deliberately wish to embarrass the noble Lord, Lord Sassoon, my noble friend and colleague in the Government, because of the way in which he has handled these exchanges in the Lords as well. I think the Government now realise—George Osborne himself has said it in the Commons, and so has David Cameron—that we are all in this together, having said that before about the recession in Britain and the problems here. That is absolutely true in respect of what we do to help the European Union to deal with the eurozone crisis. It is always a pleasure to follow the noble Lord, Lord Liddle, who is an illustration once again of how Labour has become solidly pro-Europe, with the notable exception of Douglas Alexander, who, in his Guardian article of 13 November seemed to be talking about the repatriation of certain powers, but we will gloss over that for the moment. It is none the less a pleasure to agree with the noble Lord that the eurozone will get through this crisis, probably with a single euro intact. I notice that the noble Lords, Lord Lawson and Lord Flight, have previously promoted the idea of two different currencies—a soft one and a stronger one. That may eventuate, but I doubt it, because I think of the technical problems involved, the money transfers and so on. I think they will get through it. I have always been a European optimist and I think I am entitled to be on this occasion. The press in Britain always give the wrong impression—some of the continental newspapers are beginning to do it as well—of the briefings they receive, including from the meetings of the last two days. The British journalists are getting briefed by British government officials on these matters, and they say that things are impossibly difficult after every meeting. That is not so. I believe that the eurozone Ministers on Tuesday and the ECOFIN Ministers meeting together for the whole 27 yesterday have made substantial progress in dealing with the German resistance, for reasons of the Bundesbank and the forthcoming German elections, in accepting the idea of combined policies to create a new syndrome in Europe, including with the ECB being given the additional powers that it must have to be the lender of last resort. That will come, but it takes time to get through these things. British anti-Europeans always say that national sovereignty is sacred and the national interests—whatever that means; it is sometimes a meaningless phrase—are primordial. When the sovereign countries have to be carefully consulted in the European Councils as these painful matters are being discussed, they complain about the delays. There is bound to be a delay for a new experience where no Minister expected this to happen. I know that rules were allowed to be broken, but we are being wise after the event. This country has probably done that kind of thing on internal policies on many occasions and all countries do it. On this occasion, it was creating a new structure for the single currency, which has been a tremendous success. Let us remember, please, that the euro has not been devalued on the international markets. Maybe some member states have to offer higher yields and lower prices to buy the bonds now, because of the crisis of individual sovereign debts in particular countries. Why the hysteria about Italy? Ten years ago, Italy was offering rates of interest of 8 per cent and above on bonds of the equivalent term length to those that they are now offering 7.6 per cent on. These are temporary matters until these problems are solved, as I am sure they will be. It is very important for us to focus on the main elements of what will come out of these matters. I believe I am right in saying that there have been enough hints now, derrière les coulisses in the corridors, to suggest that the IMF and the EU financial authorities at one level or another, including the member Governments, are talking very closely about working together. The IMF has already made an approach to Italy to give it a tide-over facility to help the new Prime Minister. Incidentally, he is not undemocratic at all. He was confirmed and sustained on a democratic vote of the Parliament. That buys Italy time to get through these problems. Italy has no problem of liquidity. People often think that it does, but that is not the case. It has a much lower budget deficit than we do in Britain, at only 1.5 per cent. With all the other parameters coming into this, the hysteria in Britain must decline so that we reach a correct solution for what needs to be done. I believe that the IMF and the EU will work together, coming up to the crucial talks that will take place on 9 December—the headlines say there are 10 crucial days to save the euro. We know that most of the ““outs”” still want to join the euro. It is amazing. We saw what the Polish Minister was saying just a few days ago. Britain now needs to support this process, as the member states support us in dealing with our own internal recession and our problems of the slowdown of the British economy. They are sympathetic to us. They helped us in the Falklands, too. When the Argentineans invaded, they all supported us through and through, including Italy and Spain, even though it was much more difficult for those two countries. Let us remember European solidarity. That way, we will achieve our aims.