Douglas Carswell's Blog

Government shifts policy on bailouts

It's good to see the government shift position on the Euro bailouts to "not a penny more".

At least, I think that's the position - the minister in the Commons yesterday talked in difficult-to-decipher Whitehall-speak.

Compare the government's position today to where it was last year, when ministers nodded through the bailout mechanism for fear of being seen to "bang on about Europe".

But just as the government catches up with the curve (and the headbangers), the curve (and the headbangers) move on.

Attention in the Treasury now needs to focus on what might be the least worst options when default and decouple come to Euroland. Do ministers have plans to ensure the IMF sticks to its tried-and-tested rescue formula involving currency devaluation and debt restructuring? That would necessarily mean some countries exiting the Euro. If so, what steps might we take to help friends and neighbours re-establish their own currencies?

Now ministers can see that the �20 Billion contingent liabilities they signed us up to over the past year are looking less contingent by the day, will they draw a line at further bailouts over Portugal and Ireland, too?

Perhaps most ominously, has anyone in the Treasury considered that some member states might want a Brady bond-style intervention, if French, Spanish - and possibly British - banks go belly up on the back of a Greek default?

And, of course, what impact might a sovereign default have on our own government's borrowing projections?

Perhaps above all, ministers need to ask themselves if they have full confidence in the top officials at the Treasury, Cabinet Office and Bank of England whose steady-as-she-sinks advice helped land us in this mess.

Back to all posts