European Council

Andrew Love Excerpts

Monday 20th December 2010 Commons Chamber

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The permanent mechanism will not be introduced until June 2013. Meanwhile, we are left with this temporary mechanism, which is widely viewed as inadequate to the task. That is likely to mean repeated austerity measures on behalf of Spain, Portugal and perhaps others who are caught in this contagion. That cannot be good for the United Kingdom and its export performance. What is the Prime Minister doing to raise our case at a European level?

[The Prime Minister]

I would make two points to the hon. Gentleman. First, as I have described, there is the mechanism, which has that headroom. However, eurozone countries should be using the eurozone facility. We do not have a say over eurozone member states’ financial and fiscal policies, so it makes much more sense for eurozone countries to raise that money and subsidise each other if that is what they choose to do. That is what the eurozone facility, which is hundreds of billions of euros, rather than €60 billion, is there to do. I make one other point to the hon. Gentleman: only a limited amount can be done to help countries just by making these transfers. There must be fundamental reforms in those countries, whether that involves cleaning up banks, dealing with labour markets, having more active monetary policies or making their fiscal policies real. All those things will make a difference.