I sought and obtained an Urgent Question today in the House of Commons on this bailout.
If there is any question of the Prime Minister agreeing to the new European Stability Mechanism, this should require a quid pro quo, namely that the British taxpayer should be relieved of the obligation to underwrite any bailout of eurozone countries by repealing the existing European Financial Stability Mechanism – which the European Scrutiny Committee, of which I am Chairman, described as “legally unsound”.
If this is not repealed it will continue until 2013, hanging like a sword of Damocles over the British economy. The collapse of the Portuguese Government makes it almost inevitable that we will be called upon to underwrite the bailout of their economy to the tune of about £3.5bn. If the Chancellor of the Exchequer had announced yesterday in the Budget speech that there had been £3.5bn to pay to Portugal, there would have been uproar and dismay.
We must insist on the repeal of the mechanism entered into by the previous Government and endorsed by the Coalition Government – this course of action is open to the Prime Minister today in order to relieve the British taxpayer. Now that the whole issue is under review, the Government should insist on the repeal of the existing mechanism and if not the new mechanism, which requires a Treaty change, should now be subjected to a referendum. The new European Stability Mechanism which was to be agreed today has now been deferred to June, because Germany is insisting on compliance with the terms it has laid down and together with the new "Euro Pact" effectively creates a two-speed Europe, dominated by Germany.
The whole of this situation explains why it is that Britain must insist on no bailout of eurozone countries and a referendum on this creation of a two-tier Europe, as I have continuously urged over recent months in debates in the House of Commons.