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European Council

STATEMENT I am sure that the whole House will join me in paying tribute to Trooper Ashley Smith from the Royal Dragoon Guards, who was killed in Afghanistan last week. He died serving our country, and our thoughts are with his family and friends. We have also heard news this morning that a member of 40 Commando Royal Marines has died from his injuries. He is the 300th member of the British armed forces to lose his life as a result of the conflict in Afghanistan. When such a tragic milestone is reached, we should re-emphasise our support for our armed forces and for all that they do. Inevitably, some will use this moment to question our mission and our purpose there. We are paying a high price, but let me be clear: we are in Afghanistan because the Afghans are not yet capable of securing their own country from terrorists. It is for our own national security that we help them. When they can do it alone, we will leave. In the meantime, we must give our armed forces everything they need to get the job done, and that includes our unequivocal support right across the country. With permission, I should like to make a statement on last Thursday's European Council. It was rightly focused on securing the economic recovery, and it was unanimous that this required early action on budget deficits. The Council also dealt with Europe's growth strategy, the need to sort out the problems in the eurozone and our approach to the G20. It also delivered important progress on Iran. I would like to take each point in turn. On deficits, the conclusions from the Council could not be clearer. Delaying action would entail ““major risks””, and the Council called on member states to meet budgetary targets ““without delay””. Since the last European Council, the problems in Greece and the scale of the sovereign debt crisis have become apparent to almost everyone. That is why there is such unanimity across the EU for early action. It is also why President Barroso paid tribute to the efforts the UK Government, saying:"““Consolidation is necessary for confidence and without confidence there will be no growth.””" On growth, the Council agreed a new strategy called Europe 2020. This follows on from the Lisbon agenda, the aim of which was to make Europe the most competitive market in the world. The document has some worthwhile objectives, including raising the level of research and development and improving education. This should not interfere with national competencies, so I secured explicit agreement that the new strategy must be"““fully in line with the relevant Treaty provisions and EU rules and shall not alter Member States' competences””." We should be clear that all the strategies in the world cannot conceal the fact that EU countries all need to get to grips with the real problems that harm our competitiveness—not by endlessly setting targets, but by taking action. This includes action on the extent of our debts, on the affordability of our pensions and on the scale of our welfare dependency. Europe has never lacked strategies, but European countries have frequently failed to deliver them. We will also continue to press for the real stimulus that European economies need—that is, more trade, more international investment and more action to break down the barriers to business. This means pushing for agreement on Doha, reforming and completing the single market and making the process of trade easier. Even without Doha, there is a huge amount that countries across the world can do to facilitate trade. I want Britain to be one of the driving forces in helping to bring this about. Next is the eurozone. Britain is not in the euro, and, let me be clear: we are not going to join the euro—[Hon. Members: ““Hear, hear.””]—but a strong and successful eurozone is vital for the British national interest. Already, about half our exports go to the EU, fourth fifths of them to the eurozone. As this House is aware, however, with the situation in Greece and the need for a support package from the other eurozone members, there is no doubt that the eurozone as a whole faces real challenges. So I was generally supportive of the Council's efforts to strengthen the eurozone governance arrangements, but I was equally determined to ensure our national interests are protected. On budget surveillance, let me be clear: the UK Budget will be shown to this House first and not to the Commission. Of course, we will share projections and forecasts, just as we do with the International Monetary Fund and other international bodies: so, co-ordination and consultation, yes; clearance, no, never. On sanctions, for those who breach their economic obligations, the Council agreed that"““Member States' respective obligations under the Treaties will be fully respected””." Because of this, and because of the special opt-out negotiated by the last Conservative Government, sanctions cannot be applied to the UK under the current framework. Sorting out the eurozone and adding to its governance arrangements is clearly vital for Europe. There may well be significant changes coming down the track. Whether they require treaty changes or not, our position will be the same: we will back measures that will help sort out the eurozone; we will not back measures that pass power from the UK to Brussels. As we are not members of the euro, we will not back measures that draw Britain further into financial support for the euro area. On the G20, the EU Council discussed our priorities for the upcoming meeting. As well as taking action on the deficit, the Council also agreed about the importance of reforming the financial system. It is vital that the meeting in Canada back the right action on reserves and on capital. On the issue of a banking levy, the European conclusions were helpful. We wanted the Council to endorse the idea of countries introducing a levy on financial institutions to ensure they make a contribution to rebuilding public finances. We did not want the Council to mandate a particular form of levy or how the money raised should be used. I am pleased to say the Council conclusions reflect that approach. On Iran, we argued that it is time for action, not just words. The Council conclusion refers to measures, including restrictions on trade, banking, transport and the oil and gas industry. Final agreement will be reached at the Foreign Ministers' meeting. The Council also reached important conclusions on Iceland's application to join the EU. This country should be a good friend to Iceland and a strong supporter of continued EU enlargement. But Iceland does owe the UK £2.3 billion in respect of the compensation paid by the Government to UK investors, following the collapse of its banking sector. We will use the application process to make sure that Iceland meets its obligations, because we want that money back. Finally, it is important that even in difficult times we support people in the poorest countries who suffer from the most severe poverty. The European Council reaffirmed its commitment to achieving development aid targets by 2015 and, supported by the UK, to review that annually. The Council delivered good outcomes for Britain. Our citizens do not want new structures to talk about things, but a new resolve to do things, such as getting a grip of our massive budget deficit, developing the single market and building the conditions for strong, sustainable and balanced growth. That is what the Council was all about. I commend the statement to the House.