Eurozone Crisis Statement House of Commons

was the introduction of the art of fund. Awarding the artist retell

rides to dead artists are lapses at the end of this year. Will this

The I can confirm that, but I will speak to my colleagues on the

impact on the art market and how we will proceed with this. This excess

of apprenticeships is no doubt vital to the prosperity of areas

such as the West Midlands. Can my honourable friend up to a

powerhouse on apprenticeships in the West Midlands? It is a rosy day

for the West Midlands, too, because in the West Midlands apprenticeship

starts are up by over 50 % on 2009 and 10. We must press on. Statement

by the Chancellor of the Exchequer. I wanted to update the House as

early as possible on developments in the Eurozone overnight and in

the absence of the Prime Minister as he travels to the Commonwealth

Heads of Government Meeting. I want to talk about the meeting yesterday

in the European Council. The crisis in the euro-zone has caused

instability, greatly undermined confidence and is having a chilling

effect on economic growth in many countries, including our own. It is

in our overwhelming national interest that that courtyard and,

comprehensive and lasting solution to the Eurozone's problem is found.

For the decisive resolution of this crisis will provide the single

biggest boosted the British economy this often won the break-up of the

euro would be the single greatest threat to our prosperity. Barbecue

and had to solve the problems has been clear, consistent and forcibly

expressed. The Prime Minister and I have set out to the House and a

number of occasions, reinforcement, recapitalisation and resolution.

First Eurozone member states need to reinforce their bail-out fund.

Weak European banks need to be recapitalised. The unsustainable

position of Greece's debts needs to be resolved. If this solution is

the last then the members of the euro need to address the logic and

monetary union by pursuing greater fiscal integration within the euro-

zone while at the same time protecting Britain's interests. We

have to improve competitiveness and a peripheral economies of the

Eurozone and competitiveness across the whole European Continent. This

is the solution of the crisis we have been advocating for months and

the solution once again at the gate to by the Prime Minister at the

meeting yesterday. Our view is last night very good progress has been

made towards solving the immediate crisis, very good progress on all

fronts. The deal put together is much better than was expected

yesterday afternoon, but to me - - much detail remains unresolved. We

have to keep up the pressure to get the details completed. They have

started down the right road, but now they must finish the job. First

on recapitalising banks. We are pleased that the European Council

agreed to the proposal hammered out by myself and other finance

ministers at the weekend. All major European banks will be required to

hold the peace and nine percent capital ratio that the end of June

next year, including marking to market all of their exposure to

sovereign debt. The European banking up our TASS but achieving

this target means banks will require an extra 106 billion euros

of capital and the council confirmed but this cannot be raised

privately, then governments will have to step up. I can confirm to

the House that in the assessment of the European Banking Authority and

our own at parties, no British bank requires additional capital. This

is an important expression of confidence in this country's

banking system at a time of global financial stress. European member

states also agreed to co-ordinate guarantees of term funding should

they be required and we have ensured that state aid rules will

be applied properly and European banks will be restructured if

necessary just as the European Commission demanded of the last

British Government two years ago. While some would have wanted any

than tougher banking agreements and more capital going into Europe's

thanks, we should welcome what has been achieved by this agreement,

unlike the totally inadequate stress tests of last year, we now

have a significant of extra resources. The UK and others

insisted that their commitment from the whole of the European Union on

banking is conditional on the two other key component of the solution

to the crisis I set out, are reinforced by a wall and a

resolution of great debt. These are matters for the euro-zone, not the

UK, and both matters were progress was also made last night. On Greece,

a headline agreement was reached its - - reached... for the euro-

zone will contribute an additional 30 billion euros and because the

British Government has made sure we are not part of the Greek bale-out

none of that extra 30 billion will come from a taxpayers'. But private

holders of Greek sovereign debt will be asked to accept a nominal

write-down of 50 %. A lot more work is needed to put this into practice,

including detailed negotiation to the private sector, but we said

that the debt of Greece were unsustainable and we are pleased to

see a resolution in sight. On reinforcing the size of the fire

will the Eurozone have set out to options. One is to preside from the

bail-out fund insurance on new debt issued by eurozone countries. The

second is to create special purpose vehicles that can attract resources

from private and public investors. In their statement, the Eurozone

said that the leverage effect of both options will very but they

could be expected to yield around one trillion Euros. We have always

believed that the role of the European Central Bank is critical

of an eye but then the positive statement made by the incoming ECB

President. Tocher Special Purpose vehicles has given rise to

questions over involvement of the IMF and major shareholders. As I

have said to the House, Britain has always been one of the IMF's

shareholders and bigger supporters. We helped create the institution 60

years ago, the last Government agreed to increase its resources

two years ago and this government not only ratified that agreement

but also helped to make the IMF more representative of the new

world economy by brokering a deal last year the give countries like

China and Brazil a greater say while securing Britain's seat on

the board. The IMF has been an active participant in the package

is put together to support Ireland, Portugal and Greece and it has also

been active in extending flexible credit lines to Poland and Mexico,

as well as supporting other countries in central and eastern

Europe. It currently has 53 lending programmes around the world of

which only three are in the euro- zone. Supporting countries that

cannot support themselves is what the IMF exists to do and there may

well be a case for further increasing the resources of the IMF

to keep pace with the size of the global economy and Britain as a

founding and permanent member of discovering board stands ready to

consider the case for further resources and contribute with other

countries if necessary. Let us remember that support for the IMF

does not add to our debt or deficit and that no one who has ever

provided money to the IMF has ever lost that money. But let me be very

clear, we're only prepared to see an increase in the resources of the

IMF to all countries of the world. We would not want to see IMF

resources used only by the Eurozone. By all means let countries at large

firm hard seat reserves like China considered but did - - but in their

own money into the Eurozone special purpose vehicle, but that must be

their decision. The IMF can only lend to countries of the programme

for adjustment. Britain will not be pitting its resources in either. We

do not have a surplus, but a very large deficit and it had to use our

own resources to recapitalise our banks. An active member of the IMF,

yes. Support for the IMF will help them with the advice and technical

support, yes. But the IMF contributing to the Eurozone bail-

out fund, know. Britain contributing money, no. That is a

clear position. We expect the euro- zone members to use the next few

days to provide much more detail about their plans to increase their

firewall and sort out great debt. We have made it clear that the

sooner this happens the better for the whole world economy. We must

maintain the momentum, but this package will not buy it some

resolve the longer term issues of how to make the euro work more

effectively. These longer term issues were addressed yesterday and

they included proposals for greater fiscal integration and neutral

control over the Budget policies of Eurozone member governments. As I

said, I have argued that we need to have followed the remorseless logic

of monetary union and that does involve a loss of national

sovereignty for countries in the euro-zone. It is in our interest

that the euro operate more effectively, provided the interests

of all 27 member states are properly protected in key areas of

European policy like the single market, competition and financial-

services. We are insistent that our boys will continue to be heard and

our national interest protected. An important marker was put down on

Sunday. No one pretends that sorting this out in a satisfactory

way will be easy, but it is a necessity. That is the context in

which we should approach potential changes to the treaty. This

coalition government has already proved to can protect Britain's

interests by getting us out of the last government's involvement in

the Eurozone bail-out, holding down the European Union Budget increases

are beginning to lot but guaranteed that no further power and

competences can be transferred to Brussels without the consent of the

British people in a referendum. We will protect the interests of

Britain again offered bid discussions of but possible treaty

change. Will try to rebalance the responsibilities between the your

opinion Union and the member states. Finally, the euro will not find

lasting stability until its peripheral members become more

competitive. That means credible plans to reduce Budget deficits, a

commitment made in the first section of yesterday's agreement,

but it also involves difficult decisions on pension ages, business

tax rates, welfare reform and educational standards. Britain is

not in the euro, but we are taking these difficult decisions at home

because the ultimate lesson of this crisis is that unless you can pay

your way in the world I compete around the globe then your country

will be next in the firing line and I am determined but our country

will never be in the firing line. thank the Chancellor for coming to

the House today. I am responding on behalf of the opposition. It is

good that some agreement has been reached but with so little detail

there remained many unanswered questions and I cut the Chancellor

can help the House today because what ever happens in the euro-zone

will have huge ramifications for British families and businesses. On

the recapitalisation of the banks, is he confident that the deal

announced is sufficient and that UK banks do not need any further

recapitalisation and what he keep that untrue view? What estimates as

he made at the exposure of UK banks to Greek, Italian, Portuguese and

Spanish sovereign debt? Can he confirm that a House of Commons

estimates of $3 billion for Greece and $17 billion for Italy reflects

the current position for UK banks? While the agreement says banks and

other creditors are invited to accept a 50 % loss on the Greek

sovereign debt, is the Chancellor confident that the vast majority

will agree and by when? On the expansion of the European financial

stability facility, Dulcie believe that the one trillion Euros package

as efficient and does it amount to the big bazooka that the Prime

Minister talked about earlier this month? Or are we going to be back

here again in a few months' time which will mean further uncertainty,

undermining confidence, undermining investment and undermined in growth,

which is the last thing that Britain or Europe needs? Can the

Chancellor explained how the leveraging will work and when does

he believe the detail for credit enhancement and Special Purpose

vehicles will be finalised? His they eat F S F sufficient and if it

must also fund bank recapitalisation will it be

sufficient to give confidence to the markets and will there be funds

remaining to underpin any sovereign debt crisis and prevent further

contagion? While we have a clear economic interest in the euro-zone

sorting out its problems, the interests of British taxpayers must

be safeguarded. It would have been wrong for Britain to pay twice

through put on contemporary you bail-out funds and through the IMF,

but if this back it is indeed the final and permanent daylight front,

then any British role should be to the IMF alone. I feared the

Chancellor's question and answer to himself in the IMF on his statement,

but can he clarify what he said on the radio this morning when he said

the IMF is not going to put additional resources directly into

the Eurozone. Bossy believe that there will need to be a further

increase in contributions to the IMF and whether or not he succeeds

in persuading them to describe them anything other than a fund is

The President of the euro some that will keep non-member states closely

informed of the preparation of the outcome of the sum at. Closely

informed. Has Britain now has simply been reduced to receiving a

postcard from Brussels? How will he ensure that our vital national

interest will be helped -- heard a loud and clear in future

negotiations? On the forthcoming treaty changes, can the Chancellor

Abed what the Prime Minister was unable to do yesterday? Is it the

Government's policies to seek to repatriate powers as part of their

policy changes? The missing piece in this agreement is the lack of

any plans for a jobs and growth. Not mentioned at all in a statement

this morning. Without growth, we cannot solve the debt crisis, the

banking crisis or the jobs crisis. At this time, Britain should be

leading the charge and pushing for a plot -- a proper plan for jobs

and growth across Europe. But the Chancellor cannot do that because

with unemployment at a 17 years high in Britain and with no growth

since last autumn, and so borrowing now set to be �46 billion higher

than he planned, he is clinging to an austerity plan which is failing

here in Britain. With the you repeat -- the British economy flat

lining, and with only Greece and Portugal growing more slowly than

Britain, isn't it time we had a plan for jobs and growth across

Europe, but also here in Britain? thank the honourable lady for some

of for questions. We miss the constructive and consensual

approach of the Shadow Chancellor. We're talking about the bread and

would institutions, and he is in a place called button would. That

adds to their pantomime theme. Let me answer her questions. Four start

-- firstly, and British banks, of course we keep the situation

regarding liquidity under constant review. We have participated in the

recent work by the European banking authority and we thought it was

important that this was done at an EU level, rather than a Eurozone

level. I repeat what I said in a statement. No British bank requires

additional capital, which is very good news for us all. On the

question she asks about getting private sector involvement in the

right down of greed debt, this is one of the key unresolved issues

from last night. We now need to see whether the headline agreement

reached on behalf of the private sector can be implemented in

practice. I have confidence that it can be. This is one of the crucial

next steps that the need to get some of. She asked about the

exporters of the UK banking system and the UK economy to areas brittle

economies in Europe and these are published regularly by the Bank of

England. I do not intend to repeat them today. On the question she

asked about the overall fund, the figure of one trillion euros is the

number that the eurozone themselves have put forward on their far wall.

Some have said it will be larger, but it is significantly larger than

what we had yesterday. We should welcome that. As with the private

sector involvement in the Greek deal, we now need to see the

details as to how they will create this leverage. One is a first loss

insurance scheme. The second is special purpose vehicle which they

ought to get private investment into an there openly speculating

about getting Chinese money into that special purpose vehicle. When

it comes to the IMF, they can only lend directly to countries and

countries with programmes or flexible credit lines which are

agreed. That will remain the case. They cannot lend into this special

purpose vehicle. That also be the position of the United Kingdom. We

do not think Britain can contribute to the special purpose vehicle,

with our deficit. It would add to our debt if we were to do so. We

have had to use our own resources to deal with our own problems in

this country. Of course, it is crucial that the IMF remains a

central economic institution in dealing with the world's problems.

I would urge her to reconsider Labour's position on this. I know

the honourable gentleman lead the Labour Party in the committee to

vote against the increase in IMF resources, which the last Labour

Prime Minister negotiated at the London 2009 some at. Whatever I

have said about hem, I do not think anyone would doubt that a highlight

of his premiership was the negotiation of the G20 deal in 2009.

It is astonishing that the Labour Party voted against that agreement.

I would urge them, as we have these discussions over the next few

months about the IMF and potentially increasing its

resources to deal with all the countries of the world, as we have

that discussion, I would urge them to reconsider their position on

this and reconsider their rather odd position on the euro, would be

seen to be holding out membership of the euro, or that is certainly

what the Labour leader was doing at the weekend. To be in the euro but

out of Siam s seems a rather bizarre policy. -- out of the IMF.

A solution to this crisis requires resolving the Greek crisis and

dealing ought with the European far wall. There have been two European

councils this week and we will continue to argue for the national

interests of Britain as we enter into the difficult discussions

ahead on potential treaty change and making the euro work, and

especially above getting -- especially about making this

Continent more competitive and increasing jobs and growth.

Following under. The Chancellor made in his last remarks, I am sure

he would agree that the debt crisis cannot be resolved without

investment in the Eurozone. What evidence has he seen that the EU

has the will to implement the necessary reforms on the supply

side of the economy to restore Europe's global competitiveness?

Well, what I did say to him is there is increasing evidence that

people are focused on the structural issues facing the

European economy. If he looks at the agreement issued by the

eurozone last night, when they are talking about Spain and Italy, they

don't just talk about the importance of getting the budget

deficits down, but the talk about plans to increase the pension age,

to make Labour contribution more flexible. All of those measures in

Britain have been appalled by the party opposite. Does he agree that

one of the reasons why the bank recapitalisation work three years

ago was because we were able to provide the sort of detail to the

markets that we were taking necessary action? Can he tell us

when we will here how much Greek debt will be written down and which

banks in Europe will require additional funds from governments

or other sources? Can he also let's know whether or not there is a

commitment on the part of the Eurozone to provide real cash in

the rescue fund, or is it some sort of complicated financial instrument,

of the sort which might have contributed to this sort are off

problems in the first play is? in the first place. The European

Central Bank was not prepared to provide those resources for many

reasons to do with the history of the European Central Bank and the

history of other central banks in Europe. They have turned to these

options to try to leverage out the money they have already committed.

I think that is the sensible choice for them, given those other

constraints. There are trying to get other private investors around

the world involved to leverage up the fund. Where I completely agree

with the right honourable gentleman is that the sooner we get this

agreement in detail, the better. This applies equally to what he

said about the private sector involvement in the Greek right down.

I think a mistake was made in July as the made a deal but took months

to implement it. The job is not finished yet. They now have to get

the detail, reassure the markets that they have got a grip of the

situation, and that is where we will continue to exert British

pressure. In what respects does the Chancellor believe that the

proposals for a two-tier Europe in the fiscal union do not represent

constitutional economic change in the relationship between the

European Union and ourselves? if he is referring -- referring, as

I suspect he is, to the European Union Act, there are clear

procedures in place to establish whether powers or competencies are

being transferred from this Parliament to Brussels. Those

procedures are clearly set out. I that say it is in our interest that

the euro works, and that requires greater fiscal into -- fiscal

integration within Europe. The single market and competition

policies are issues for all 24/7 members. -- for all 27 members. I

remain unconvinced that the euro can survive in its current form and

less the weaker countries bring about their own currency and

devalue. The honourable gentleman has consistently been making his

argument for at least as long as I have been in House of Commons, and

longer than that still. I did say he probably takes some comfort from

events over the last decade that they have tended to reinforce the

views he has expressed. But it is in Britain's interest that we make

the euro work. The disorderly break-up of the euro would be an

enormous economic blow for this country. 40% cover trade as within

the Eurozone. We can only see -- if we set aside the argument which we

will have this sort of man next year about the domestic effects of

policies we have taken which we would argue promote growth and the

opposition argue undermine growth, if you set that aside, everyone in

this House will accept that instability of the Eurozone has had

a chilling affect on our economy and that of others. Let's imagine

what the break-up of the euro would do to our economy. Can he explain

to the House what the consequences would have been for our membership

of the IMF if those who had voted against the increase in

subscription had actually prevailed? It would have been

catastrophic. We would have been the only shareholder in the IMF not

to have ratified the deal which was initiated at the London G20 summit.

It would have completely isolated Britain. We would have either had

to leave the IMF or lost our permanent seat on the board. She

wants us to get up and leave the table that we are currently at in

the IMF's. The Chancellor quite rightly said in his statement that

the euro will not work unless countries regain competitiveness.

Can he tell us how he thinks that is possible if they do not have the

full package from the IMF, which includes devaluing their own

currency? Well, first of all, it is perfectly possible for in areas

within their monetary union to increase their competitiveness.

There are part of the United Kingdom that have improved the

record -- relative economic performance over the last 20 years,

and also part of the United States. But it is hard work. It requires

tackling the very tough issues like labour market reforms, pension ages,

tax rates and so on. These are very controversial. The time would say

that in countries like Spain, Italy and Greece, people have been

confronted by the reality of the need to make change. We will need

to see whether they undertake that change, but the IMF is the guardian

of the wrong programmes and makes constant assessment of the

programmes in Ireland, Greece and Portugal. I would actually say, or

boy do not want to be premature, in Ireland, you are seeing quite

substantial improvement in the Irish economic performance after

the difficult decisions that they The Foreign Secretary once

described the euro as a burning building, so why not help our

friends out? We have discussed this before and we disagree. What the

Foreign Secretary said at that time was that the euro, what I would say

is he described the euro as a burning building with no exits.

That was the point he was making. At disorderly break-up of the euro

this autumn or in the foreseeable future would be a cause an enormous

and stability - - the stability. says there is no UK funding going

to the Ural bale-out and yet when he talks about supporting the IMF,

he says that this was with advice and suggestions only, or is he

using taxpayer money to support the IMF? I can he forced the IMF not to

use that money for euro be a light? Let me be clear. The IMF can

potentially have a role, but this is to be decided, in helping the

Eurozone organise its special purpose vehicle, provide technical

support and to all the things it is very good at doing, which is

stepping in and providing expertise. That is a perfectly legitimate role

for them. But what we're saying is there should not be IMF resources

going into the special purpose vehicle in terms of a lending

programme. The IMF lends money to countries with conditions attached

and that is what it should do and the future. So, we are not a

supporter, and I don't think the IMF is a supporter of changing

those articles. But this will be are against. We are against Britain

contributing to the special purpose vehicle. I very much welcome what

the Chancellor has said that resolving the immediate crisis in

the euro-zone and securing the long-term future of euro currency

itself is both in Britain's national interest, but would he

agree with the the what is in our national interest is that we remain

with them the positive relationship with the eurozone states?

absolutely agree that there is a very important role for the 27

member states to promote free trades. Also, that the European

Union will have a very important role in things like financial-

services regulation and it is important that that is discussed at

the level of the 27. I completely agree with him and I would say that

Britain has been absolutely clear in recent months that issues that

affect the 27 should be discussed at the 27, and not at the level of

17. It is partly our insistence that there had been to European

councils this week to make sure that proper procedures are followed.

But Chancellor said that British interests should be properly

protected when the euro-zone countries move to giving up

national sovereignty and having greater fiscal integration. Can he

clarify how that will happen? would say this is the argument of

the coming months that we have to make as the discussion starts on

whether there will be future treaty changes. We have got to look a go

ways of securing our voice and and other members who are not in the

eurozone. That is toppled by a Nicosia can engender but we also

want to make sure that there is a rebalancing of responsibilities

between the European Union and its member states. Does my right

honourable friend agree with me them now but the 17 euros some

countries have established the precedent of holding their own

Euros Sam Obst and have created another President, the President of

the euro group, there is a real danger that they will start to

agree policies to suit themselves and then impose them on the other

10 EU countries who, thankfully, like the UK have not adopted the

euro. Were I a agree with him is that we have to be alert to the

danger of our caucus of the 17 members of the Eurozone having a

caucus on areas that should be the preserve of the 27. When week

allowed under the lap - - last Government's that Britain would not

be at the euro group there was a fear at the time that the euro

group would form a caucus. That has not happened. If anything they have

not worked closely enough over the last decade. But he is absolutely

right that we need to make sure that the doomed to use a caucus in

the future that undermines our boys and influence or that bounces the

27 members of the Union. I would say that all countries not in the

eurozone are alert to this challenge. Last night the British

Prime Minister had discussions with the Polish and Swedish Prime

Minister to discuss the issue he - - discuss this issue. In see

guaranteeing that no British money will be used directly to the IMF or

through any other vehicle? Again guaranteed a British money is not

going into the special purpose vehicle. The Chancellor is

absolutely right to say that a disorderly break-up of the euro

would be a disaster, but as the euro is going to break up, should

we take the advice of the honourable member and organise an

orderly break-up of the euro? don't think the orderly break-up of

the euro could be done in a way that would not lead to a disorderly

impact on financial markets and the British economy. Basically what

happened was that Greece lied about its finances and Italy is probably

still lying about its finances. One of the things it would have helped

would have been if there had been independent auditing of this

country's finances. Many people a post that, but surely we should be

a big hitting it now. The danger for the government is that that

applies to all 27 countries, not just 17. Indeed, in this statement

said they talk about having independent auditing of finances

and independent growth figures upon which to base fiscal projections.

That is precisely what we have introduced in this country so you

don't get political pressure to alter the growth forecast of the

tight that the former Chancellor detailed in his recent

autobiography. The 50 % hair cuts has been described as a charge on

the banks, but actually Greek sovereign debt is held by insurance

companies, pension funds and hundreds of thousands of individual

savers. I wonder if you can tell us what is in this package will what

measures need to be taken to restore confidence in the sovereign

debts, the existing sovereign debt of the peripheral euro-zone

countries? The first point he makes is a very good one, but the write-

down of Greek debts ultimately does have an impact on people who

invested in Greek debts, either directly or more likely when you're

looking at the general population through their pension fund and the

like. Thankfully British institutions were not that heavily

exposed to Greece and its banking system and economy compared to some

other European countries like France and Germany. He is right

that people will have taken losses. In Britain the institutions he has

talked about up all provision for Greek class many months ago, so it

won't come as a shock to those institutions. More broadly he asked

about confidence in the stock of debt. Of course this is one of the

challenges. The first first loss is for newly issued debt and they will

have to see at how the special purpose vehicle works as well. In

general if there is confidence that there is a sufficient set of

mechanisms here to stand behind the euro and countries in trouble, but

will increase confidence in the stock of debt. If there are limited

treaty changes necessary I think there will be supports on these

benches. A real political question, will the Chancellor and Prime

Minister be able to withstand pressure from his own backbenchers

for more fundamental reform of the treaty? What I would hope is that

we would persuade all parties in this House. What I would say is

there is strong agreement on the Conservative benches that we want

to rebalance the responsibilities and repatriate some powers. The

Liberal Democrats and the Liberal Democrat leader has stopped about

rebalancing responsibilities and did so earlier this week. The

shadow trade tree Minister for seems to forget the position set

out by his party leader this weekend which was when he was asked

if he felt bustles have too much power he said know. That is the

official position of the Labour party going into these because

emissions. Can the Chancellor explain to the House how he does

come about buckled though the United Kingdom has a deficit this

year which is actually larger than that of Greece, our interest rates

are similar to those in Germany? honourable friend makes a very good

observation that because of the credible fiscal plans we have set

out, we have secured confidence in Britain's ability to pay its way in

the world and have taken our credit rating of negative watch and we

have secured for our country record low interest rates. This interest

rates to be at risk if we pursue the policies advocated by the party

opposite and it would be a bizarre position to take into this European

Council discussions went right at the top of the agreement signed

yesterday is the statement that countries of course need to pursue

in the words of the agreement, policies of fiscal consolidation

and structural reform. They have voted against every single policy

of fiscal consolidation and reform. Does he think that the 50 %

haircuts will be sufficient and does he expect the Italian debt

holders to also made a trip to the barber's? We think that 50 % is a

very good number. We had in her own minds some were around 50 % and we

wondered whether that was good to be achievable. That was one of the

pleasant surprises that happened last night. It is only a headline

agreements and that now needs to be put into practice if the Steelers

to mean anything. I think it is best for me to stick on talking

about Greece. RBS shares have jumped 7% this morning in response

to the Eurozone statement. Does the Chancellor share the market's view

that British banks are sufficiently capitalised to withstand not just

their hair cut to greet debt, but also any other event jollities that

might arise in the next few months Yes, I am confident. The Bank of

England and the FSA also monitor that closely. The interesting thing

about the test which was applied was that its require banks to

market the sovereign debt exporters. That had been resisted by the

eurozone for the last 18 months. Of course, the market has priced in

some haircuts, to continue the barbershop analogy, and the fact

that we have now tested our banks against those markets against

sovereign debt gives us confidence that the banking system in Britain

can withstand whatever is thrown its way in the coming months.

some years, I chaired the preparation for the euro committee

under Tony Blair. The present Secretary of State for business

served. I have some experience in that area. When I am listening to

the statement today, it seems to me that since the Governor of the Bank

of England has said we RN the worst crisis in the history of the

international economy, he is coming over extremely timid about the role

of this country in sorting out that talent out. Well, I will have do

some through the index of the guilty men by Peter Oborne to see

whether there is a reference to the honourable gentleman. There are

some references to some of my own colleagues in that book. I have a

good alibi. I was writing speeches for the Foreign Secretary at the

time, and making it clear what some of the problems were with the euro.

Some of those problems have of course come to pass. LAUGHTER. As

the Foreign Secretary used to say at the time, he wrote his own

speeches. And I write my own speeches today. Those who have

ridden my speeches before may have got themselves into the House of

Commons, which is a very good thing. What I would say to the honourable

gentleman is this. I can put the reject his idea that Britain had

been marginal. We have insisted these things are discussed at the

various councils. A key component of the announcement today is the

banking package. There was at 10 our negotiation which Britain was

in the heart of to achieve that banking package last Saturday. We

are right at the centre of it. I suspect he agrees with me that the

frontbench policy of his own party to marginalise us from the IMF

would also see us leaving that he negotiated table. -- that he

I cannot confirm that any plans are dead in the water. The eurozone is

determined to pursue a financial transaction tax. They talk about

that tax in their statement. What I can confirm to my honourable friend

is that Britain will not accept the financial transaction tax at an EU

27 level. We are not opposed in principle to those taxes, but we

will not have a European Union level tax while countries like

America and China do not have that tax. I think that is a long way off,

if ever. I think it will be a long time before there is a European

Union finance will transaction tax. Over the next few years, we are

likely to see the emergence a of a two-speed Europe. Parts of the

Government will go in exactly the opposite direction. What can the

Chancellor and the Prime Minister do to make sure we are not locked

out of the fundamental decision is that will be made? Welcome I just

told accept the premise of his question. As I say -- well, I just

don't accept. We will look at existing competencies, as we

outlined in the Coalition agreement. The Labour Party have ruled

themselves out of taking any powers back from Brussels to Britain. I

suggest that he uses his lobbying powers on he is on party.

fundamental cause to the problem has not been addressed and that is

a lack of competitiveness. If there is a further downward leg in this

crisis, can the Chancellor as sure the House and the country that

Britain will not be called upon in any way to help financially with

any further rescue packages, whether through the IMF or not?

Well, as I have said to the House, Britain should not be part of

eurozone bail out. We got ourselves out of -- when we came in to --

when it Labour came into office, they committed us to being part of

the EU bail out of the eurozone. We have got ourselves out of that.

We're not contributing to the eurozone bail out of Greece. Normal

be can tit -- contribute to a special purpose vehicle that they

create. We are clear on that. When it comes to a IMF resources, as

with any countries in the world, we contribute to their resources for

programmes that it carries out across the world. We will continue

to do so. The articles of the IMF to not allow money for special

purpose vehicles. I would think more highly of the Chancellor if he

would admit that the last government and the people of this

country bailed out there banks and that is why they are more stable in

this country. Most economists say the fund will require two trillion

Euros. Firstly, I am happy to acknowledge that the previous

Government recapitalise the British banks. Obviously under enormous

duress at the time. The Conservative Party did not oppose

that. We supported it at the time and were advocating it in advance

of that happening. I can put a recognise it was a difficult

decision for the previous Government to take. When it comes

to the size of the fund, of course there are those who would like to

see the fund even larger. We should welcome the significant progress

that has increased the size of the fund several fold to potentially

around one trillion euros. That is a very significant sum of money. He

asks an interesting question, which is what is happening in our time as

members of parliament to the balance of economic force in the

world. I suspect we will spend many years ahead talking about that.

am keen to accommodate remaining colleagues, but I remind the House

there is a business statement to follow and a significant debate

thereafter. So I am looking for brevity. Can I welcome my right

honourable friend's approach? Does he agree that the new proposals for

Fiscal integration and mutual control in the eurozone does

nothing to reduce the case for a rebalancing of responsibilities

between the EU are and member states? Yes, I think I can agree

with them. -- hem. Can the Chancellor update us on the

situation regarding Cypriot banks with their very many UK customers

and they're tying -- tie into the Greek economy? Well, of course we

not only look at British banks under close surveillance, but the

subsidiaries and other branches operating here in the UK. We are

closely monitoring the case for a Cypriot banks, as we do for other

eurozone banks here and abroad. the Chancellor seen any credible

figures which show that Greece can solve its long-term deficit and

debt problems and still remain in the year rose on? -- in at the

eurozone. I think there are plenty of things that crease can do to

make itself more competitive. It is coming from a long way back and

there are things it can do with its pension ages, tax rates and labour

market that would make it considerably more competitive and

it is today. Can the Chancellor please give us more detail about

how he intends to represent the UK's interests when it eurozone

members have their own separate summits and President? There are

already eurozone finance ministers meeting every month. And was agreed

by the previous Government. But there will now be two a year

eurozone summits of heads of government. I don't think we should

regard that as a fundamental threat. We have to allow them to get

together to try to better manage their own currency. But we're Clare.

We are looking at ideas about summits taking place after other

meetings so that there cannot be coppicing. How confident is he that

countries like China will want to contribute to the special purpose

vehicle and what will happen if the do not a? The short answer is we

will find out whether China wants to contribute. The President of

France has said that they will speak to the President of China

later today. Much to the annoyance of some of his backbenchers, the

Chancellor supports greater it -- greater fiscal integration, but

precisely what does that mean? think he is being a little unfair

to the Conservative backbenchers year. Quite a lot of Euro-sceptics

would make the argument, as I would, that we'll was said this is what

would happen if we joined a single currency. We always said that you

would end up having to lose national sovereignty or give up

powers over your budget. That is one of the reasons we didn't want

Britain to join. That is why be stayed out. Given that the monetary

union logic leads to greater fiscal integration, we should let that

happen because I think it would help the euro work better. But

Britain wants no part of that. Harlow tax payers will be very

relieved that none of their hard- earned money is being used to prop

up failed socialist government in Europe. -- Governments. But they

will also want to be sure that my honourable friend will do all he

can to repatriate powers in Europe, unlike those opposite to believe

the garden is rose. He has my assurance that we will seek to

rebalance the responsibilities. He draws our attention to the fact

that Greece and Spain are run by Socialist government, but I don't

want to intrude on their poll tax. Haven't just taken -- their

politics. Having just taken the decision to help Greece, what

provisions does he suggest that British institutions should make

regarding Italian debt? I am not providing that advice across the

dispatch box, but we monitor the British financial institutions and

make sure that there appropriately prepared for things that might

happen. The test that I have been talking about by the European

banking authority takes into account a market to market

examination of sovereign debt exporters. Can I say to my right