25.07.2012
By Simon Miller
The House of Lords EU Committee has written to the financial secretary Mark Hoban demanding to know whether the euro was "an accident waiting to happen".
With the eurocrisis deepening, the committee wants to know what the government's position is to a wide range of scenarios that have been presented to them in previous evidence.
In its letter published today, the committee voiced serious concerns that the government had not fully appreciated the consequences of their decision not to take part in the fundamental elements of a banking union.
It warned that there was a risk that the UK could lose its ability to maintain influence on the EU and other Member States and questions what the government is doing to make sure that the UK was not marginalised from debate through the shifting of discussions outside the main EU channels to forums where the UK has no voice.
The committee asked Hoban if the euro was likely to survive and how long euro area leaders were expected to remain committed to providing such significant financial support to Greece.
With regard to a potential Greek exit from the euro, the committee stressed the need for UK authorities to have plans in place to protect UK markets, entities and citizens from the turbulence that would result.
Written in the context of renewed turmoil in the financial markets, the wide-ranging letter addresses key questions including:
• What more needs to be done to provide the inspired leadership in the EU necessary to make effective and efficient decisions in solving the crisis?
• Will the ESM (European Stability Mechanism) firewall be large enough to secure Italy and Spain’s position, as their bond yields continue to rise?
• Does the European Central Bank (ECB) have sufficient financial resources and tools to act as an effective backstop to the euro area? Would a treaty change be required to widen the ECB’s role?
• What contingency planning are the UK Government and the European Commission taking to deal with the consequences of a potential Greek exit from the euro?
Chairman of the EU Sub Committee for Economic and Financial Affairs Lord Harrison said: “Whilst the 17 euro area member States are making decisions in smoke-free rooms, the UK could be left outside fuming. Although the UK remains outside the euro area, it needs to ensure that it remains at the very centre of the EU and its single market.
“As the crisis unfolds, the need for decisive EU leadership in Brussels and wise UK leadership in London grows ever more acute.”
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