After the summer recess the House of Commons ( not the Lords) has returned to business today. After the usual round of Questions and Statements the main business is a short Bill authorising the Government to agree a change to the European Union Treaty which will allow the Eurozone countries to establish a bailout fund which in theory is meant to help the Eurozone countries who are struggling to raise funds in the normal way. The new fund to be called the European Stability Mechanism is intended to replace two other similar bailout funds one of which the UK is liable to pay a proportion of if the loans it has made are not repaid. I think we should have been much tougher in our negotiations. We should never have been involved in these bailout mechanisms in the first place and if the other European Union Countries were as desperate as apparently they were to have a new fund established within the terms of the EU Treaty’s we should have made absolutely certain that not only would we not be liable for future liabilities but we would be immediately released from any existing contingent liabilities. There might only be a small risk that Portugal and the Republic of Ireland will default on their obligations but there is a first time for everything. Furthermore, since this particular bailout fund was discussed and set in place it has to all intents and purposes been overtaken by events. Even at 500 billion euros it is not considered bid enough and the Eurozone Countries have now set off down teh path of a new Fiscal Union treaty which was the treaty under consideration when the Prime Minister quite rightly exercised his veto last December.
Bailout funds – in essence just more loans – are not the real solution to teh problems being faced by struggling Eurozone countries. What is needed is for these Countries to start to live within their means- just as the UK is painfully having to learn to do.