This autumn represents a real challenge to the EU and eurozone to put in place the right measures to ensure a sustainable and long term solution to the eurozone crisis. There have been some really important steps recently in moving towards that solution, such as last week’s announcement of ECB bond buying (or in the jargon Outright Monetary Transactions) by Mario Draghi.
Although more still needs to be done, I want to focus on two key initiatives.
The European Stability Mechanism is a vitally important tool to allow eurozone Member States with a permanent financial assistance mechanism to support each other in financial difficulty. Parliament passed this week a Bill approving a change to Article 136 of the EU treaties. Not only is this an important part of the solution for eurozone members, but no single thing would do more to help our own economy than a restoration of stability and return to growth in the eurozone.
This change also removes any requirement for the UK to take part in any future EU programmes of financial assistance to eurozone countries. Also today, the German Constitutional Court has decided not to impose any injunction on the bills going through the German parliament to implement the European Stability Mechanism and Fiscal Compact, measures which in any case apply only to eurozone countries, not the UK.
Commissioner Michel Barnier has published proposals today on the Banking Union. It is only the start of the process and the UK, along with other Member States, as well as the European Parliament, will need to look at the proposals in detail. We will ensure that the final proposal meets our national interests and protects the unity, integrity and operation of the single market that is so vital to our own jobs and growth.
A full banking union for the eurozone will help restore stability to the single currency. Today’s proposals build on the agreement we reached at the European Council in June to implement a single supervisory mechanism as a first step towards banking union. We have said that a full banking union should be for the single currency only and so support its proposal to give the ECB a direct supervisory responsibility for all eurozone banks.
We still will need to do much more to restore growth both inside and outside the eurozone, and the Government remains vigorously committed to developing the European Single Market, to smarter, less costly EU regulation and to more free trade between Europe and the rest of the world.
Creating a stability mechanism and a banking union for the eurozone is not a silver bullet for Europe’s economic woes, but they are welcome initiatives which will help create the conditions for growth and jobs.