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EU Council

My Lords, is my noble friend aware that the Prime Minister is absolutely right not to join the proposed new treaty and to distinguish it from the existing treaty? Is he not also right to say that it is essential for the eurozone to sort out its problems? The problem with doing that has been that it has confused the debt problem with the exchange rate problem. The reality as far as Greece, for example, is concerned is that it is inconceivable that it will become competitive at the present exchange rate, however much it is bailed out. There is therefore no way that these matters will be solved until certainly Greece, and perhaps others—one must hope not—leave the eurozone. It is crucial that if they do so, the period of transition should be as brief as possible. The difficulty is that we do not have available in terms of notes and coins a currency that will enable such countries to leave, quite apart from the dreadful problems there will be in the transition over the need to impose exchange controls, which one must doubt the Greek Government’s ability to do. Until that side of things is sorted out, no amount of bailout or fiscal co-ordination will solve the problems of the eurozone.