Wednesday

25th May 2022

UK treasury pondering death of the euro

  • The British parliament as seen across the river Thames. Hoban: 'I am not going to comment on whether the eurozone will remain intact' (Photo: Paul Vallejo)

The UK's treasury minister has - during a cut-and-thrust debate in parliament - admitted that London is preparing for a potential break-up of the eurozone.

The 47-year-old junior minister made the controversial comments while under fire from Conservative Party MPs and opposition Labour Party members in Westminster on Monday (20 June) about the implications for the British economy if Greece goes bust.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

He began by saying: "I am not going to engage in speculation on what might or might not happen ... Members will agree that it would not be appropriate for me to discuss the detail of those scenarios."

He then neglected on several occasions to make a positive statement of British confidence in the survival of the eurozone.

The most virulent prediction of the euro's demise came from Labour MP Jack Straw, a former foreign minister, who said: "Instead of sheltering behind complacent language and weasel words that we should not speculate, the government should recognise that this eurozone cannot last ... Since the euro in its current form is going to collapse, is it not better that that happens quickly rather than it dying a slow death?"

Responding to another question about the possible "domino effect" of a Greek bankruptcy, Hoban later admitted: "Discussions are taking place between the Bank of England, the Treasury and the FSA [Financial Services Authority], and we are considering a number of scenarios and potential market events."

Toward the end of the session, he added: "I am not going to comment on whether the eurozone will remain intact. Clearly, this crisis demonstrates the huge strain that the eurozone is under."

On Greece itself, Conservative and Labour MPs were united in their belief that the new bail-out under discussion in Brussels will fail.

John Redwood, a member of the Conservative Party's policy group on economic competitiveness, said: "Greece went bankrupt more than a year ago, but the ministers of certain countries cannot believe it and are wasting taxpayers' money on trying to pretend that it has not happened."

For his part, Labour MP Denis MacShane voiced concern about "a new flood of [Greek] economic migrants [coming] into Britain." Labour's Mike Gapes said the EU's "sado-monetarist programmes" - on further Greek austerity cuts - will not work.

Hoban added that if Greece goes bust British banks will lose $4 billion (€2.8 billion) in terms of sovereign bonds, French banks $16 billion and German banks $20 billion. But Jack Straw noted that if all forms of debt are included, British banks would lose €13 billion, French ones €34 billion and German ones €53 billion.

Commentators remarked that Hoban's statements do not represent official British policy on the future of the eurozone so much as his personal weakness in debate.

Andrew Gimson, writing for the British daily The Telegraph, said: "Hoban behaved like an Englishman who finds himself at the scene of a traffic accident involving a number of reckless foreign drivers, and wishes to pretend he has seen nothing."

James Forsyth, writing in The Spectator magazine, noted: "Hoban's performance today did nothing to assuage concerns that the coalition is chronically under-prepared for the consequences of what is going on in the eurozone."

France aims for EU minimum-tax deal in June

EU Commission vice-president Valdis Dombrovskis said on Tuesday that Poland's recovery plan could be approved within a week. This could also help unblock Warsaw's reluctance to agree to the tax deal.

MEPs boycott trip after Israeli snub

Last-minute Israeli blacklistings and red lines have prompted MEPs to call off an official trip, posing the question if Israel can belittle the EU Parliament with impunity.

EU states warn of looming food-price crisis

Prices of cereals, fertilisers, and oilseed have shot up drastically in several European markets due to Russia's war on Ukraine, prompting some member states to seek EU aid.

EU plans to jointly invest in defence capabilities

EU countries need to refill stockpiles after several member states supplied weapons to Ukraine in its fight with Russia, and to phase out existing Soviet-era weapons systems, and reinforce air defence.

Opinion

Orbán's overtures to Moscow are distasteful and detrimental

Some Western European politicians are reviving the chimera of a negotiated settlement. None of this makes the current, half-hearted approach towards sanctioning Russia look better — nor does it shed any favourable light on the cravenness of Hungary's current government.

Opinion

Brexit hostility to Good Friday Agreement is damaging UK in US

Democratic Unionist MPs could affirm unequivocally they support the Good Friday Agreement, with no return of a border with physical controls on movement of people, goods or agricultural produce within the island of Ireland — but they won't.

News in Brief

  1. France 'convinced' Ukraine will join EU
  2. Von der Leyen: Russia hoarding food as 'blackmail'
  3. Legal action launched against KLM over 'greenwashing'
  4. Orbán refuses to discuss Russia oil embargo at EU summit
  5. Turkey's Erdogan snubs Greek PM
  6. ECB: Crypto may pose a risk to financial stability
  7. UK PM Johnson faces renewed questions over Covid party
  8. Sweden gives 5th Covid shot to people over 65, pregnant women

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic delegation visits Nordic Bridges in Canada
  2. Nordic Council of MinistersClear to proceed - green shipping corridors in the Nordic Region
  3. Nordic Council of MinistersNordic ministers agree on international climate commitments
  4. UNESDA - SOFT DRINKS EUROPEEfficient waste collection schemes, closed-loop recycling and access to recycled content are crucial to transition to a circular economy in Europe
  5. UiPathNo digital future for the EU without Intelligent Automation? Online briefing Link

Latest News

  1. Orbán oil veto to deface EU summit on Ukraine
  2. France aims for EU minimum-tax deal in June
  3. 'No progress in years' in Libya, says UN migration body
  4. Toxic pesticide residue in EU fruit up 53% in a decade
  5. Orbán's overtures to Moscow are distasteful and detrimental
  6. The Polish-Lithuanian Commonwealth is back
  7. EU aims to seize Russian assets amid legal unclarity
  8. Close ties with autocrats means security risk, Nato chief warns

Join EUobserver

Support quality EU news

Join us