Wednesday 26 November 2014

Warning over UK's links with EU

Published 01/08/2013 | 00:13

The committee also expressed concern that the euro area could be vulnerable to further crises
The committee also expressed concern that the euro area could be vulnerable to further crises

Britain risks becoming increasingly marginalised from the European Union (EU) while remaining outside the single currency, a group of peers says.

In a letter to Financial Secretary to the Treasury Greg Clark, the House of Lords EU Committee said the UK's "fingertip" hold on the single market risks getting weaker as the EU expands and more countries show willingness to join the euro.

The committee also expressed concern that the euro area could be vulnerable to further crises as long as EU leaders continue to "muddle through".

Lord Harrison, chairman of the EU sub committee on economic and financial affairs, 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 eurozone crisis, he 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 (economic adviser at Arbuthnot Banking Group), a tendency simply 'to muddle through'."

Lord Harrison added: "Whilst some progress has been made by some eurozone members, we were concerned by the view of witness Vicky Pryce (former head of the Government Economic Service) 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."

In the letter, published, the committee also asked Mr Clark what can be done to return sustainable debt levels to Greece and how he would respond to concerns that confidence in bank deposits has been irreparably damaged by the Cypriot banking sector bailout.

The letter also asks whether it is healthy that negotiations had ground to a halt as the dominant country, Germany, prepares for elections.

:The Government must respond to the committee's letter by August 30.

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