Eurozone Crisis

My Lords, I thank everyone who participated in this debate. Out of the 20 Back-Benchers who spoke, I think that 16 spoke purely on the European issue, although we had some highly interesting other speeches. At least the objective of my noble friend Lord Flight and me in initiating this debate was achieved. I am grateful to my noble friend Lord Ashdown for saying that there was a degree—perhaps a surprising degree—of overlap between my view and his. Even he was envisaging that the structure of the eurozone might not remain immutable. However, with respect, I would like to disagree with one point that he made, when he said that people like me opposed to the euro held that view even if it was in Britain’s interest. That is not, with respect, correct; I am against the euro because I believe it is against Britain’s interest. The economic and, indeed, the political reasons for that were powerfully spelt out in the speeches by my noble friends Lord Lawson and Lord Flight. From the pro-euro side, I thought that my noble friend Lady Kramer raised a very interesting question when she asked whether, looking back later, all this would appear just a melodrama. While nobody was making predictions—I was not making a prediction and saying that anything was certain—I do not think that the concern being expressed about the eurozone can really be dismissed as a melodrama. The noble Lord, Lord Myners, described graphically some of the problems in the banking sector. We would not have had the central banks swaps exercise on that massive scale yesterday if there was not a crisis of liquidity in the banking system, originating in Europe. Even the noble Lord, Lord Liddle, talked about the euro teetering on the brink while my noble friend Lord Ashdown, as I have already said, referred to the possibility of the structure altering. The noble Baroness, Lady Kramer, is of course quite right to say that there are different attitudes to the euro in the eurozone. An enormous amount of political capital has been invested in the project. It has always been the objection of me and people such as my noble friends Lord Lawson and Lord Flight to the euro that it is indeed a political project. The question is not what the attitudes in the eurozone are but whose attitudes will actually prove to be right in the long run. It is interesting, anyway, that some of the attitudes in the eurozone in countries such as Finland and Holland are changing. Indeed, polls in Germany show that a very significant proportion of the population would like to see the restoration of the deutschmark. The noble Lord, Lord Myners, said very accurately that the key to the future is Germany. One point that I think did not emerge at any time in this debate has been the really quite startling rise in German interest rates in the past few days, which I am afraid is a very strong indication that the markets are beginning to look beyond one or two countries failing, and seeing what that means for the public finances of no less a country than Germany. Germany is the key. The noble Lord, Lord Williamson, talked about the possibility of a eurobond and how that might help the situation. I remain sceptical whether Germany could ever agree to that, because I think Germany sees the convergence of bond yields as being part of the origin of the crisis, and that would appear to replicate that. The second issue is the central bank and the purchase of bonds, on which various people have touched and which some have advocated. Whatever the rights and wrongs of that, my opinion is that Germany is very unlikely to go down that road because I think the key for Germany in the establishment of the euro was not just the ““no bail-out”” rule but the insistence that the European Central Bank should be modelled as closely as possible on the Bundesbank. If, as Germany sees it, the integrity of the ECB is in any way jeopardised, Germany would rather leave the euro. I was going to say that, whatever the disagreements in the debate, we were unanimous on two things. The first is that the debate should have been held in the Chamber, but we were not unanimous because the noble Lord, Lord Lea—this is the reason we all treasure him—strongly disagreed with that and went against the consensus in a minority of one. The second thing, which we were unanimous on, was on the excellence of the maiden speech given by my noble friend Lord Wolfson. That was not a surprise to me, because I have shared Eurosceptic platforms with him in draughty village halls in different parts of the country from time to time. He modestly referred to his dynastic political origins. That brought to my mind the phrase that Churchill used when Austen Chamberlain made his maiden speech, which he described as a speech to warm a father's heart. That is exactly what my noble friend’s speech was. With that, I thank everyone who participated in the debate. Motion agreed.