The committee also makes the point in its letter that the UK Government needs to consider seriously how this country can continue to work effectively within the evolving European Union, while remaining outside the single currency.
Commenting, Chairman of the EU Sub Committee on Economic and Financial Affairs, Lord Harrison, said:
“The UK’s fingertip hold on the single market risks getting ever weaker as the EU expands. While we remain outside the single currency and distant from any EU banking union, we risk becoming increasingly marginalised, especially when other countries continue to show their willingness to join up.”
On the issue of resolving the problems in the euro area crisis, Lord Harrison said:
“The overwhelming view from the evidence we heard was that short term stimulus is vital to get the euro area back on course. However, over the last six months what we’ve witnessed is more back-tracking by EU leaders away from all-important reforms, and, according to witness Ruth Lea, a tendency simply ‘to muddle through’.”
“Whilst some progress has been made by some eurozone members, we were concerned by the view of witness Vicky Pryce, that the EU ‘needs another good crisis’ to ensure proper reform and progress. The committee believes that this is a highly regrettable state of affairs.”
The letter is the result of ongoing scrutiny, by the Lords EU Sub Committee on Economic and Financial Affairs, of developments in the euro area and the Government’s response to these developments.
In its letter, published today, the committee also asks the Minister other questions about the situation in the euro area, such as:
- What can be done to restore sustainable debt levels in Greece where the “situation is arguably unsustainable”?
- How would he respond to concerns that the confidence in bank deposits, shaken by the “inept” handling of the Cypriot banking sector bailout, has been irreparably damaged?
- What is his response to our concerns that citizens’ tolerance of austerity ‘was being sorely tested’ in countries like Portugal, Greece and Cyprus?
The Government must respond to the committee’s letter by 30 August 2013.
The letter is available on the committee’s webpage.