THE BBC AND ‘EUROPE’ ANALYSIS OF EU COVERAGE ON BBC RADIO 4's TODAY PROGRAMME

9 APRIL – 30 JUNE 2012

SUMMARY – Survey of BBC Radio 4

Today Programme

9 APRIL – 30 JUNE 2012

• The proportion of speakers who were clearly identified as eurosceptic was lower than in any of the eighteen previous Newswatch surveys. 99 guests (27%) spoke in favour of the EU or specific legislation, 60 (16%) were against the EU or specific legislation, and 207 speakers (57%) offered a neutral, factual or unclassifiable viewpoint.

• This bias was compounded by that the programme rarely mounted coverage which genuinely investigated matters from the eurosceptic perspective. The expression of eurosceptic opinion amounted to only around 50 instances in 18 hours of EU coverage, most of them incidental comments. There were only a handful of interviews with those who were advocating a radical reappraisal or criticism of EU policy, compared to at least 20 alone on the subject of banking and fiscal union.

• Those who could be defined as ‘robust’ eurosceptic – figures such as the Conservative backbench MP, Mark Reckless, who has stated publicly that he wants a radical re-shaping of the relationship with Brussels, including a referendum on the subject of ‘in or out’ – also made a very low level of appearances. There were no appearances by eurosceptic members of the Labour Party. The combined input of ‘robust’ eurosceptics was around 1,661 words. There were only four relatively short interviews with them – three with Lord Lamont and one with Mr Reckless.

• No ‘robust’ eurosceptic was interviewed about the subject of a referendum on EU membership. The only figures that were Kenneth Clarke, who stated the idea was preposterous, and Lord Owen, who – although arguing that radical organisation of the EU was required to protect the single market – said he was a firm supporter of the acquis communautaire and the principle of continued UK membership.

• Although a number of senior Conservative Party figures appeared on the programme, and they were asked about whether there should be a referendum on the changes in the eurozone, all of them said baldly this was not necessary because of the referendum ‘lock’. In balance terms, this made the absence of ‘robust’ eurosceptics even more puzzling – and especially so because all the senior Conservatives argued at length on the programme that closer integration of the eurozone was essential.

• Labour figures who appeared, such as Chuka Umunna and Alistair Darling, made sweeping claims about the failure of ‘austerity’ policies, that they were fuelling a growth in right wing parties, and it was claimed that 3m UK jobs depended on the EU. Such views were not balanced by appearances from eurosceptics or sufficiently challenged by Today’s presenters.

• Relatively few UK politicians figured in the EU coverage during the survey. There were more appearances by European politicians and EU officials. This created its own imbalance because all those who appeared from ‘Europe’ were broadly in favour of the EU and its policies. Those from Greece, for example, while they may have wanted a radical re-drafting of their bailout, were unanimously in favour of remaining in the eurozone.

• The programme devoted 14.6% of its output to EU affairs, double the long term average. The coverage focused very heavily on the unfolding problems of the eurozone – and only eight and a half minutes per week dealt with other EU issues, equating to just 1.3% of Today’s available output. Only 9.4% of Today’s EU coverage focused on issues other than eurozone economics. In consequence, many EU-related matters of significant concern to the UK were seriously under-reported. A proposed 6.8% increase in the European Commission budget, for example, was deemed to merit only one short interview (with a Commission spokesman, who of course supported it). A proposed major overhaul in fisheries quotas ignored the eurosceptic perspective and had only minimal input from representatives of UK fishermen.

• The EU ‘summit’ at the end of the period adopted measures towards further banking union as a solution to the eurozone crisis. Throughout the period, Today included contributions – some of them lengthy interviews – with speakers who favoured this approach. Proponents encompassed senior Labour and Conservative politicians, various EU figures, and a range of experts and commentators who appeared especially in the Business News sections. In contrast, there were only two contributors – their appearances both very brief - who disagreed with banking union.

• Today projected in most of the coverage that the main battle of the period was between ’austerity; - as advocated especially by Angela Merkel, who was dubbed ‘the Iron Lady’ by BBC presenters – and ‘growth’, as championed by the British Labour Party, Greek left, President Obama and Francois Hollande. Programme coverage brought numerous examples of why ‘austerity’ was not working including a range of special reports chronicling suicide and hardship from Greece. Labour figures were given space to attack at length ‘anti-growth’ policies. But throughout the entire period, there was only one interview – with the German MP Michael Fuchs – with someone who thought that it was a valid policy, and no attempt to explore the eurosceptic viewpoint that unrealistic fiscal expectations had created inbuilt problems with the euro from the outset. The impression was strongly conveyed that the Today programme was a supporter of ‘growth’ rather than austerity.

• Analysis of a range of EU-related topics covered by the programme – such as an Interview with Lord Mandelson, an examination of a claim by the European Commission of back duties on UK imports of garlic from China, the resignation of the Dutch government and the 6.8% budget rise being sought by the European Commission – also shows in microcosm the marked bias by Today against considering eurosceptic opinion.

• A poll carried out on May 20 for the Independent on Sunday showed that amid the tumultuous events affecting the eurozone during this period, 46% of the UK population wanted to leave the EU. But despite this, only three speakers on Today were identifiably supporters of withdrawal. This was 0.8% of the total contributors. Only the survey undertaken one year previously, in summer 2011, yielded a lower figure.

• Longer-term trends confirm that Today seriously under-reports withdrawal opinion. Since the publication of Lord Wilson’s report into the BBC coverage of the EU in 2005, Newswatch has monitored 1073 editions of Today, about half of those broadcast, covering three and a half years. . In those programmes those clearly supporting withdrawal have been asked only 20 questions about the subject – that’s one question about withdrawal for every 54 editions (nine weeks) or every 153 programme hours.

• Those who appeared who supported withdrawal were Nigel Farage – who was interviewed once and contributed a 90 word soundbite – and a vox contributor from Brussels. The combined contribution was 768 words, or 0.9% - less than one hundredth - of the total words spoken about the EU during the survey period.

THE BBC’s TODAY PROGRAMME AND ‘EUROPE’

PART ONE: SUMMER 2012 MONITORING STATISTICS

This survey investigates the Today programme’s coverage

of EU news and current affairs over a twelve-week

interval between Monday 9 April and Saturday 30 June

2012. Newswatch monitored and analysed all 72 editions

in their entirety..

All programme items were timed and logged, and all items

that had relevance to the European Union, or its

relationship with the UK, were fully transcribed and

subsequently analysed on a line-by-line basis. Information

was collated in Newswatch’s bespoke database to analyse

coverage patterns and to enable comparisons with data

collected during the eighteen previous Newswatch

projects undertaken since 2002.

This methodology allows for weaknesses in individual

programme items to be explored in detail, and also for

longer-term trends and imbalances to be identified and

investigated.

1.1 OVERVIEW

Today is BBC Radio 4’s flagship news and current affairs programme. It broadcasts for three hours each weekday morning, and for two hours each Saturday. Each edition is also made available ‘on demand’ for those visiting the programme’s dedicated website and through the BBC iPlayer, and selections are included in a ‘Best of Today’ podcast.. The Today website also features an audio archive, containing programme material dating back to June 2003.

RAJAR figures reveal that Today had a weekly audience reach of 6.76 million listeners during the second quarter of 2012 – the period 2nd April - 24th June. This was an increase of 100,000 listeners on the first quarter, but 400,000 down on the same quarter in 2011.

1.2 AIRTIME

Newswatch’s airtime calculations focus on ‘feature reports’, to ensure totals are not affected by repeated content such as bulletins and newspaper reviews and ‘non-news’ items such as sport, weather and trailers for other Radio 4 programmes. The total space available on Today for features during the Summer 2012 survey interval was 132 hours and 50 minutes. Of this, 18 hours and 32 minutes – 14% of the total available airtime – was EU-related. All EU material broadcast during the survey was fully transcribed, categorised and analysed. These transcripts had a combined length of 269,000 words.

Since 1999, Newswatch has monitored, tracked and analysed Today for 293 weeks, which equates to 1834 individual editions with a combined airtime of 4981 hours. This has generated over seven thousand EU transcripts, running to over 4 million words of broadcast output. This long-term monitoring has established that Today has, on average, devoted 6.4% of its ‘feature’ output to the discussion of EU themes. During the Summer 2012 interval, EU coverage was more than twice the long-term average, and the second highest of any Newswatch survey interval. Only the previous survey, in Winter 2011, saw more EU reporting, with 22.5% of the programme’s feature items given over to EU discussion.

The table provides details of the nineteen Newswatch surveys undertaken between September 2002 and June 2012. A number of the surveys, particularly during election periods, included multi-programme monitoring. For the purposes of the current survey, information pertaining solely to the Today programme has been isolated to facilitate direct comparisons.

Survey Date Monitored Weeks Proportion of EU coverage

1 September 2002 – July 2003 47 5.6% 2 September – December 2003 12 5.7% 3 March – June 2004 13 9.8% June 2004, Mark Thompson appointed BBC Director General 4 October – December 2004 10 5.5% January 2005, Publication of the Wilson Report into the BBC’s EU Coverage 5 March – June 2005 15 10.8% 6 October – December 2005 9 8.2% 7 February – June 2006 16 4.1% 8 September – December 2006 14 2.9% 9 March – June 2007 14 3.5% 10 September – December 2007 14 4.1% 11 March – June 2008 12 3.3% 12 September – December 2008 14 4.1% 13 April – June 2009 6 5.4% 14 September – December 2009 13 5.1% 15 March – May 2010 6 6.2% 16 September – December 2010 13 5.2% 17 March – June 2011 13 6.2% 18 October – December 2011 11 22.5% 19 April – June 2012 12 14.0%

The graph presents EU airtime proportions in the nineteen most recent Today surveys, listed by the end date of each investigation. The chart illustrates the sharp increase in Today’s EU coverage in the periods of the two most recent Newswatch surveys.

1.3 WEEKLY EU COVERAGE

Today transmitted 478 EU-related items during the twelve-week survey. There were 102 bulletin reports, 73 mentions of EU matters in the programme’s newspaper review section, and 303 ‘features’, with a total duration of 18 hours and 32 minutes. In addition, there were 63 marginal or passing mentions of the EU, and three discussions of EU themes in the religious affairs slot, Thought for the Day.

The chart shows the amount of EU coverage broadcast during each week of the twelve-week survey.

EU feature coverage reached its zenith during the sixth week of the survey, (14 – 19 May) and accounted for 211 minutes or 32% of Today’s available feature airtime. Week six saw a number of EU news items simultaneously reaching the fore. These included: a finance ministers’ meeting amid a backdrop of renewed economic uncertainty in the eurozone; the aftermath of an election in Greece, which saw parties failing to agree on a coalition government; the first meeting between the new French President, Francois Hollande and German Chancellor, Angela Merkel; and the downgrading of sixteen Spanish banks amid fears of a crisis in the country’s banking sector. Coverage in week six was the fourth-highest level of weekly coverage ever recorded by Newswatch.1

EU coverage was at its lowest during the second week of the survey, with 27 minutes 4.1% of coverage being EU related.

1 The three occasions where weekly coverage exceeded the figure of 32% all occurred during the previous Newswatch survey, undertaken in Winter 2011. During the Winter 2011 survey period there were individual weeks in which EU coverage accounted for 41%, 38% and 33% of all Today’s feature reports. 1.4 EU THEMES

The table and chart show the range of EU themes that were covered by Today in its feature reports during the twelve-week period of analysis.

Subject Area Minutes % Economics, Business and Financial 1008 90.6 UK and the European Union 20.5 1.8 UK political parties' policy on the EU 18.25 1.6 European Legislation 15.5 1.4 Common Fisheries Policy 14.25 1.3 EU Foreign Policy 11 1.0 EU and Immigration/Enlargement 8.25 0.7 Relations between member states 5.5 0.5 EU and the Environment 5 0.4 EU Defence 3.25 0.3 EU Summit 1.25 0.1 General European Union Affairs 1.25 0.1

As the chart illustrates, Economics was by far the most dominant EU theme during the current survey, with comparatively little space afforded to other EU subjects. Indeed, this topic generated 16 hours and 48 minutes of coverage, compared to just 1 hour and 44 minutes of coverage for all the other EU themes combined – equivalent to just 1.3% of Today’s total available airtime of around eight and a half minutes per week.

Newswatch used its historical data to explore this coverage pattern in greater detail. The most significant EU themes in the nineteen surveys undertaken since 2002 were identified and calculations were made to assess the proportion of coverage given over to these 'main themes', compared to all other EU themes combined.

As the chart shows, the dominance of the primary EU theme – in this case Economics and Business - was greater than in any Newswatch survey to date, with a very small proportion given over to secondary EU themes.

The current survey saw 90.6% of EU airtime devoted to the main theme of Economics and Business, and just 8.4% of EU coverage focusing on secondary themes. Five of the last six surveys have shown a similar pattern, and this raises concerns that, with the eurozone crisis becoming so central to the programme’s EU coverage, other EU subject areas are routinely being covered insufficiently or ignored altogether.

1.5 THE WIDER NEWS AGENDA

All feature reports during the survey period were timed and categorised, and those news themes which received more than 30 minutes of coverage in total are listed in the table.

As the chart shows, the most significant news theme of the survey interval was that of Business and Economics, which received 24 hours and 52 minutes of airtime over the twelve-week interval, or 18.7% of the space available on Today. EU coverage was the second most widely-covered issue, receiving 18 hours and 32 minutes of feature reportage, or 14% of Today’s available airtime. It is important to appreciate that, for the purposes of Newswatch’s analysis, EU themes take precedence in the categorisation process, and the EU airtime totals presented in each survey represent an absolute maximum. Thus, despite over 90% of EU feature items being related to Business and Economics, these reports were categorised exclusively as EU stories. If these items had been categorised as Business and Economics stories rather than EU stories, the proportion of Business and Economics news would have increased to 31.4%, and the remaining EU coverage would have accounted for just 1.3% of Today’s available airtime.

Although the two most prevalent themes combined accounted for approximately one third of Today’s airtime, almost 52 hours of coverage, (39% of feature airtime) was given over to stories other than the 22 significant news themes listed in the chart. This proportion of Today was taken up by stories generating less than thirty minutes of coverage across the twelve-week survey, and the majority of these were single, standalone reports.

1.6 EU ITEM LENGTH

The chart shows the average length of EU feature items in the nineteen Newswatch surveys undertaken between September 2002 and June 2012.

During the Summer 2012 survey, the average duration of an EU feature item on Today was 3 minutes and 40 seconds. This was a decrease of 21 seconds on the average length of features broadcast during the Winter 2011 survey, but it was comparatively high when compared to historical data, with average item lengths at their sixth longest out of the nineteen surveys undertaken since September 2002. This indicates a higher than average number of extended features – there were 31 packages which lasted over seven minutes, including 12 that were over ten minutes in duration.

1.7 THE POSITION OF EU FEATURE REPORTS

Assessing the positioning of EU material in the Today running order necessitates a complex calculation, given that each half-hour segment does not carry equal space for features. For example, the first half hour of the programme generally has space for 17 minutes of features, while the last half hour has between 26 and 29 minutes. In addition, the Saturday programme begins at 7am, and has a slightly different running order to the weekday editions.

With all these variables taken into account, the next graph gives weighted totals for EU news coverage, as a percentage of the total airtime available in each half-hour segment of Today, over the full survey interval. If EU coverage had been distributed evenly across each segment for the full twelve weeks, the graph would show a horizontal line.

As the graph shows, EU coverage was significantly more prevalent in the first half hour of the programme, with 26% of feature items in the 6am-6.30am slot having an EU theme. This is as a consequence of extensive coverage of EU issues in Today’s main Business News report at 6.15am, a pattern which is explored in greater detail in the following section. Coverage remained strong across all segments of the programme by historical standards, with the lowest proportion of coverage - 10.6% - being broadcast in the 7.30-8am slot. Despite the strong coverage throughout, listeners were almost two and a half times more likely to hear an EU report if they tuned in to the first half hour of the programme than to the 7.30am-8am slot.

There are structural disadvantages for items placed early in Today’s running order: this part of the programme has the fewest listeners, and for a number of years material from the first hour of the programme has been excluded from Today’s online archive. However, partway through the current survey, the service provided by the Today website was further downgraded, and only select clips are currently made available from the post- 7am part of the programme.

1.8 THE BUSINESS NEWS

Today broadcasts a main Business News report at around 6.15am each weekday morning, along with two shorter updates later in the programme. Combined, these three slots typically account for somewhere between 14 and 20 minutes per programme, which equates to between 12% and 17% of the total coverage in Today’s weekday editions.

During the survey, Today carried 4 hours and 52 minutes of EU coverage in its dedicated Business News slots. The next table provides details of the average EU airtime per week in Today’s Business News and Business Update slots in the eighteen Newswatch surveys undertaken since September 2002.

Data from the 240 weeks monitored between September 2002 and June 2011 shows that Today’s Business News slots delivered a long-term average of 4 minutes 34 seconds of EU news per week. However the most recent two surveys have shown a very significant shift in coverage patterns. In the previous Newswatch survey, undertaken in Winter 2011, EU coverage in the Business News slots increased to 35 minutes 19 seconds per week, an almost eight-fold rise. The Summer 2012 survey saw this decline slightly, with 24 minutes 17 seconds of EU news per week, although as the chart shows, this remained far above the long-term coverage trend.

Over the course of the twelve-week survey, 142 speakers contributed to Today’s business coverage. Exactly three quarters (106 speakers) offered a neutral or factual overview rather than making any direct political point. Pro-EU speakers outnumbered sceptics in this slot by a ratio of more than four to one, with 29 Europhile speakers and 7 sceptics appearing during the survey period.

1.9 SPEAKERS

Today’s EU coverage featured 366 guest contributors during the survey, of which 240 were interviews and 126 were pre-recorded soundbites or vox pop contributions. The table lists speakers according to whether they expressed Europhile or Eurosceptic views. Each guest was categorised according to the contents of the contribution, rather than the established views of the person concerned, or their party affiliation.

Contributions by Party Labour Conservative Liberal UKIP EU Other Total

Pro-EU 10 1 4 0 44 13 72 In favour of specific EU legislation/action 1 5 0 0 2 19 27 Anti-EU or Eurosceptic 0 20 0 2 0 2 24 Against specific EU legislation/action 1 0 0 0 7 28 36 Neutral/Factual viewpoint 9 4 2 0 8 184 207 Total Speakers 21 30 6 2 61 246 366

In broad terms, 99 guests (27%) spoke in favour of the EU or specific legislation, 60 (16%) were against the EU or specific legislation, and 207 speakers (57%) offered a neutral, factual or unclassifiable viewpoint.

One particular report item created difficulties for the accurate calculation of these figures: a Business News item on 14 May contained a montage of ten speakers, but only one – the prime minister, David Cameron – was recognisable. Difficulties in the identification of a number of the speakers was compounded by their soundbites being delivered through an interpreter, and as such nine speakers were listed as ‘Other’, even though they were likely to be either representatives of the EU, or politicians from member states.

The chart shows the proportions of broadly Pro-EU, Anti-EU and Neutral speakers over the course of the nineteen Newswatch surveys since September 2002, and represents a total of 4151 individual guest contributions to the Today programme’s feature reports and news bulletins.

As the chart shows, the Summer 2012 survey was notable for two main reasons: first, the proportion of Eurosceptic speakers was lower than in any of the eighteen previous surveys, with only 16% of programme guests speaking against the EU or specific legislation. Second, the proportion of speakers offering neutral or factual viewpoints was at its highest, with 57% of speakers offering an opinion that could not be readily categorised as for or against the EU or its legislation.

This substantiates the trends observed by Newswatch during recent surveys: that increasingly Today uses economists, fund managers, accountants and investors to describe and explain the financial crisis in the eurozone, rather than inviting politicians onto the programme to engage in debate and express their ideas for political solutions.

1.10 THE WITHDRAWAL ARGUMENT

Of the 366 speakers invited onto Today to speak on EU matters, only three could be classified as ‘withdrawalist’ as a result of their party affiliation, the contents of their contribution, or the commentary given by journalists or presenters.

The table shows the numbers and proportions of identifiably withdrawalist speakers who have appeared on the Today programme in the sixteen surveys undertaken by Newswatch since 2004.

Survey Date Weeks Total Speakers Withdrawalists Percentage

Mar – Jun 2004 12 279 15 5.4% June 2004, Mark Thompson appointed BBC Director General Oct – Dec 2004 10 94 7 7.4% January 2005, Publication of the Wilson Report into the BBC’s EU Coverage Mar – Jun 2005 12 389 12 3.1% Oct – Dec 2005 9 165 3 1.8% Feb – Jun 2006 16 167 6 3.6% Sep – Dec 2006 14 98 4 4.1% Mar – Jun 2007 14 125 4 3.2% Sep – Dec 2007 14 178 5 2.8% Mar – Jun 2008 12 123 2 1.6% Sep – Dec 2008 14 139 4 2.9% Apr – Jun 2009 6.3 97 11 11.3% Sep – Dec 2009 12 197 10 5.1% Mar - May 2010 6 79 5 6.3% Sep - Dec 2010 13 156 3 1.9% Mar – June 2011 13 205 1 0.5% Oct – Dec 2011 11 517 7 1.4% Apr – June 2012 12 366 3 0.8%

In spite of the tumultuous events taking place across the EU and within the eurozone during the survey interval, the proportion of speakers who were identifiably withdrawalist was the second lowest ever recorded by Newswatch, with just 3 speakers, or 0.8% of the total contributors. Only the survey undertaken one year previously, in Summer 2011, saw a lower figure.

The 2005 Wilson Report into the BBC’s EU coverage specifically stated:

[The BBC] has failed to reflect a significant minority opinion that the UK should withdraw from the EU because this does not figure in the policies of the Westminster parties. UKIP in their written evidence say that the main news programmes are dominated by Westminster based correspondents who rarely meet pro-withdrawal politicians. The situation has been addressed since UKIP’s success in the European elections.

Evidence gathered by Newswatch in the period since the publication of the Wilson Report, showed that the panel were premature in their judgement. While there was indeed a rise in coverage after the 2004 elections (shown by the rise from Summer 2004 to Winter 2004 in the chart below) the inclusion of withdrawalist speakers dipped considerably. With the exception of the Summer 2009 survey – which coincided with the European Parliamentary Elections - those advocating withdrawal have appeared considerably less frequently after the Wilson Report than they did before.2

In all, withdrawalist speakers accounted for 5.9% of all the guests who discussed the EU in the two surveys before the publication of Wilson, and 2.7% of all the guests in the fifteen surveys after.3

Since the publication of Wilson, withdrawalist interviewees have been asked 182 direct questions by Today’s presenters and correspondents. 54 of these questions were on matters not relating to the EU at all – for

2 Even the upsurge in Summer 2009 was not necessarily as the chart suggests: eight of the eleven pro-withdrawal speakers appeared in just a single edition of Today, broadcast on the day after the election, and these contributors provided comment on the election results, as opposed to any direct discussion of withdrawal.

3 Of the 3002 speakers who have contributed to the EU debate in the surveyed editions of Today post-Wilson, only 80 have been identifiably withdrawalist. example questions about domestic policy, or about leadership or personality. 18 questions were on general matters relating to EU projects and legislation. Only 20 questions – 11% of the total direct questions put – were directly on the issue of withdrawal. Thus, in the 1073 surveyed editions of Today since the beginning of 2005, there has been an average of one question on withdrawal for every 54 editions or every 153 programme hours. Explanation of withdrawal-related policies by withdrawalist speakers since 2005 has amounted to only 5761 words - approximately 40 minutes of airtime.4 This was three ten thousandths of the space available to Today editors.

The Wilson panel expressed concerns that the level of coverage in 2004 was too little; it follows that if levels have reduced significantly since then – and the clear evidence here is that they have – this is a matter for concern. As the next section reveals, the withdrawalist speakers who did appear in Summer 2012 were isolated from both the wider events occurring in the eurozone and from interaction and debate with other guests.

Withdrawal Supporters in the Summer 2012 Survey Period

The first withdrawalist appearance was Nigel Farage, UKIP leader, who was interviewed on 26 April in a package tied to the Local Elections in England and Wales. In her introduction, presenter Sarah Montague noted that British people were ‘becoming increasingly Eurosceptic’, and suggested that this might benefit ‘one party that’s made it clear it wants to pull out of the EU’, however, she began by asking Mr Farage what the point would be in voting UKIP, given that the party had no MPs and ‘only 31 councillors’. Mr Farage spoke about how UKIP had built the party through proportional representation elections, and how UKIP had come second across the whole UK in the 2009 European Elections. He explained that the party had been focused on ‘waking people up’ to a loss of British sovereignty in its early years, but that they were now broadening their manifesto to talk about how Britain would be governed once the country had its independence back, and explained that UKIP were campaigning on issues such as education and health. Ms Montague suggested that voting for UKIP was a protest vote, and Mr Farage replied that it was ‘more than that’, and that although UKIP control only one town council, the party has shown that they can operate things well. He added that UKIP were not career politicians and from a range of backgrounds with practical experience, and that he was in the business of forming ‘a real political party, not just a protest movement.’

Ms Montague put it to Mr Farage that UKIP would immediately pull out of the EU if they were elected to government. Mr Farage agreed, and explained that he would want Britain to negotiate a free trade deal with the EU, but not be governed by Jose Manuel Barroso or Herman Van Rompuy. She then asked what this would mean for the future free movement of people. Mr Farage replied that it would mean Britain being £50 million a day better off, and that there would be no change in terms of trade with the EU. He said that it

4 Newswatch has formally monitored 1002 of the 2262 editions of Today broadcast between April 2005 and June 2012. If the figures for withdrawalist contributors are representative, then there would have been 90 minutes of airtime in total, over the full seven and a half years, in which withdrawalists spoke directly on withdrawal. This equates to 12 minutes per year. would mean that Britain would be able to stop the free flow of migrant labour from Eastern Europe, at a time when youth unemployment stood at 21%. Ms Montague asked him how this would work. Mr Farage said that never before had Britain said to a group of countries that as many people as wanted to could come, and if they were unable to find work, they could claim Social Security. Ms Montague said she was trying to understand how free trade would work, when Mr Farage wanted to ‘put the walls up’ to anyone coming to work in Britain. Mr Farage said that UKIP was a ‘a great free trading party’ and believed that the EU is inhibiting Britain’s ability to trade freely with other parts of the world. He replied that the free movement of capital and free movement of goods are completely separate arguments to the free movement of people. Ms Montague pushed the point again, suggesting, ‘So nobody in the UK could go and work elsewhere in Europe . . . and nobody could come and work here but we would trade with Europe.’ Mr Farage replied, ‘nobody is arguing that at all,’ and argued that British people had worked all over the world, and other people had worked here for centuries. Ms Montague said she remained unclear about how a policy would actually work. Mr Farage said that once a country had its independence back, it could make its own laws and control its own borders, which as a member of the EU, Britain is unable to do. Ms Montague asked again, ‘But how are you stopping people coming to work here?’ Mr Farage replied, ‘Well, you stop it by saying, ‘no longer is there an unrestricted free-flow of migrant labour allowed to come from Poland’, number one. And number two you say, ‘We will not give people Social Security benefits until they’ve been in Britain, paid taxes and obeyed the law for five years.’

With 654 words from Mr Farage, this was the longest single contribution from a withdrawalist speaker ever recorded by Newswatch in a Today programme survey. However, Ms Montague, rather than using the time to explore a full range of issues, focused only fleetingly on the matter of withdrawal, before moving onto a tangential matter relating to immigration and the free movement of labour. Hereafter, she pushed the same point repeatedly. While such questions on immigration and the free movement of labour are certainly valid lines of inquiry, it could reasonably be suggested that this issue was not the most pressing and urgent for a withdrawalist spokesperson given the wider tumult in the eurozone. The central problem was that the interview with Nigel Farage stood alone, there were no other substantive interviews with withdrawalists over the course of the survey period. Indeed, in the five surveys undertaken by Newswatch since the eurozone crisis first began to emerge in 2010, Today has not carried a single full scale interview on the subject with any withdrawalist speaker – despite opinion polls indicating clear public support for withdrawal.

The second appearance by a withdrawalist speaker arrived on 16 May, in a report concerning the general election in Greece, and comments by Germany’s foreign minister that the election was indicative of the Greek people’s commitment to the EU and the euro. Justin Webb reported from the Grand Place in the centre of Brussels and conducted vox pop interviews with a number of tourists of various European nationalities. One German woman, when asked, ‘Greece, should they stay?’ replied, ‘It’s very difficult, but we think outside EU it’s better, it’s good so . . .’ Mr Webb followed this up with the question, ‘For Greece or for Germany, or for everyone?’ and the German tourist replied, ‘For everyone, for everyone.’ In the subsequent vox pop interviews, Mr Webb altered his question to make it clear that he was asking whether Greece ought to stay in or leave the euro, and given the overall drift of the package, there is some question as to whether the interviewee, with her faltering English, actually meant ‘euro’ rather than ‘EU’. Certainly no argument was given as to why Greece ought to withdraw for the EU, apart from that it would be beneficial ‘for everyone’.

On the final day of the survey, 30 June, Nigel Farage appeared again, and became the third and final withdrawalist speaker of the monitoring interval. The soundbite from Mr Farage focused on events at the heads of government summit in Brussels.

NIGEL FARAGE: We’ve just finished the 19th summit since David Cameron's been Prime Minister, they've made some marginal changes but in reality nothing has been solved that all. The extraordinary thing, from a British perspective, is to see David Cameron cheering them on - Cameron's the one saying, ‘You must push on to a full political union, you must abolish democracy in the nation states of the eurozone,’ and I think most people in Britain look at this and say, why on earth are we encouraging them to go down this route?

This was commentary on the eurozone crisis, but in something or a circuitous way – the focus was squarely on the incongruity of a Conservative prime minister supporting closer political union within the eurozone. There followed a discussion with Peter Kellner, president of polling organisation YouGov, on the public’s attitudes towards the EU amid the crisis in the eurozone and ahead of the European Elections in 2014. Mr Kellner pointed out that public opinion was 3:2 in favour of Britain leaving the EU, but that he believed that this wouldn’t produce an automatic victory for the ‘out’ campaign, because while 35-40% of people saw ‘Europe’ as the most important issue facing Britain, but when questioned as to what matters in their own lives, Europe falls ‘way down the list.’ Presenter Evan Davis asked about the European Election in 2014, and said that these elections ‘just often act as a great protest vote, don’t they? And so you could expect a sceptical party UKIP to do incredibly well.’ Peter Kellner agreed and said that this was ‘exactly what’s happened at the last European Elections, when they came second with 17%.’ He added that the European Elections would be problematic for the Conservatives, and said that if the elections were to be held next week, he would be forecasting a tight battle between Labour and UKIP, and he said it was ‘perfectly conceivable’ that UKIP could come top in the European Election. Mr Davis moved back to the point Peter Kellner had made previously, that despite the 3:2 opinion poll rating in favour of Britain pulling out of the EU, it would not be certain that the ‘outs’ would win a referendum – and noted that this had been the position in the 1975 referendum. Peter Kellner explained that polls taken nine months before the 1975 referendum showed a 3:2 majority for leaving the Common Market, but on the referendum day itself, there was a 2:1 majority for staying in. He said that voters ‘get scared by the thought of what life would be outside.’ He said that although he wasn’t certain that Britain would vote in a referendum to stay within the EU, he didn’t believe it would be 3:2 for leaving.

The discussion with Peter Kellner covered interesting aspects of the debate, but would have been more equitable had Nigel Farage appeared for a full interview rather than simply a pre-recorded soundbite. As it stood, guest and presenter reached consensus on points which were, from a UKIP or withdrawalist perspective, rather more contentious. The chief example was the point made by Evan Davis a UKIP vote at the European Elections being ‘a great protest’ vote – the inference being that voters would be casting their ballots negatively against the government rather than positively in favour of a party supporting withdrawal from the EU. The discussion would have been far more evenly weighted if Mr Farage or another UKIP representative had been invited to discuss these issues live.

The three withdrawalist delivered just 768 words, or 0.9% of the total words spoken on the EU during the survey period. As the commentary has shown, even this figure must be considered an absolute maximum, for example, Nigel Farage in his interview spoke 654 words, but far fewer were focused wholly on withdrawal. Even with categorisation at its most lenient, the three contributions accounted for only approximately five minutes, which equates to 0.4% of the total airtime spent on EU issues, or 0.06% of Today’s available feature airtime during the twelve-week survey. As has been the case in the majority of recent Newswatch surveys, withdrawalist speakers have been side-lined, hemmed in, and questioned on issues not entirely central to the pressing EU matters of the day.

THE BBC’s TODAY PROGRAMME AND ‘EUROPE’

PART TWO: ANALYSIS OF EU COVERAGE

PROLOGUE: THE ANTI-MONARCHISTS’ TALE.

MISSING: THE EUROSCEPTICS

The number of robust eurosceptics – those who wished for a radical re-framing of the terms of membership to pull back perceived lost sovereignty and who wanted a referendum on the UK’s membership of the EU – who appeared on the programme was again extremely low. Their joint contributions – during a period of close scrutiny of the future direction of the EU and its relationship to the UK – amounted to two thousandths of the airtime devoted to the coverage of EU issues: 11 minutes out of 1,1125. None of them was asked for analysis of the eurozone crisis, or about how it was affecting the UK.

Only one supporter of this stance was interviewed, the MP Mark Reckless. He appeared on April 20 for about two minutes (358 words) and was asked only about why he opposed the decision by George Osborne to provide a further £10bn to the IMF, towards funds being used for eurozone bailouts.

Mr Reckless maintained that the IMF should stick to its original purpose, which was to provide balance of payments support for countries facing difficulties, and said it should be the European Central Bank that took steps to help the euro. John Humphries said different action was necessary from the IMF because if Spain and France wobbled ‘we all suffer’. Mr Reckless concluded by saying that in the long term, it was difficult to see how the euro could survive, and conceded that the IMF might have a legitimate role in providing temporary support after its demise. He further maintained that it was not the IMF’s job to prop up countries whose economies that were uncompetitive with Germany, and that it was wrong for UK taxpayers’ money to be put at risk to that end.

Lord Lamont also falls into the category of ‘robust eurosceptic’. He appeared on the programme three times (April 14, May 17 and June 30) and made contributions totalling 938 words, almost seven minutes. But while he was highly scathing in his contributions about the prospects of the future of the eurozone, and worried about the impact of a collapse on British banks, he was confined in most of what he was asked about to narrow procedural economic analysis of what was going wrong, and as such, was not able to make directly political points that could be construed as ‘eurosceptic’. Only three sentences of his contributions can be said to be clearly ‘eurosceptic’.

The only national political figure who was a declared supporter of an in/out referendum and who also overtly supported withdrawal from the EU to be interviewed was Nigel Farage, the leader of UKIP. But when he appeared on April 26, he was not asked about the topic at all, even though the previous day senior figures from the European Commission had been on the programme and had advocated closer integration to deal with eurozone problems. .He was instead asked whether his policies on immigration would curb the free flow of labour into the UK.

Mr Farage was the only figure to appear during the period from UKIP. A brief soundbite from him (90 words) was used on June 30 in which he criticised David Cameron for speaking in support of full fiscal integration.. The political pollster Peter Kellner of YouGov was interviewed afterwards and he said that although UKIP

5 The combined contributions detailed in this section of Mark Reckless, Peter Bone, Douglas Carswell, Sir Peter Tapsell, Nigel Farage and Lord Lamont might do very well in the 2014 European Parliament elections, they had little chance of winning a referendum on the ‘in’ or ‘out’ question.

Lord Owen was invited on June 7 to advance his case for wanting Turkish accession and a reinforcement of the single market – back to its original format – for all members including those outside the eurozone. But he made it very clear that he was a strong supporter of the EU and continued to see the need for the acquis communautaire.

Three Conservative ministers (William Hague, May 4, George Osborne, June 7 and David Lidington, June 30) were asked during the course of interviews why they did not want to hold a referendum about the EU, given the changes that were taking place. All said that such a vote was not currently necessary because they had put in place a referendum lock which required a referendum in the event of transfer of sovereignty and/or treaty changes. They each maintained that no such changes were involved in the strengthening and centralising of fiscal powers which ministers agreed during the course of the survey.

Other ‘robust’ eurosceptic politicians who appeared in soundbites were Peter Bone and Douglas Carswell (April 21) Sir Peter Tapsell (May 17). The former two protested about the UK’s further loan to the IMF and Sir Peter about the government’s approach to the Greek bailout.

It was mentioned in bulletins on May 24 that the Free Enterprise group of Conservative MPs had urged the government to draw up contingency plans for if the euro failed, including the exemption of companies from employment regulations.

Overall, therefore, UK politicians who wanted a radical re-appraisal of the relationship with the EU scarcely figured in programme coverage, despite this being a period when the European Commission was arguing for a very substantial increase in its powers and the Coalition government was endorsing such change. A poll in the Independent on Sunday6 on May 20 suggested that only 30% of voters wanted to continue the UK’s EU membership (and 46% actively wanted withdrawal) – at least partly because of continued problems in relations with the eurozone – and that large numbers of Conservatives were considering voting for UKIP in protest at current government policies towards the EU. But such views were hardly mentioned on the programme at all. The robust eurosceptics who did appear were only asked to comment about the narrow issue of the UK’s loan to the IMF, but not about strategy or the way forward in the context of the changing dynamics of the eurozone. No member of the Labour Party who was sceptical about the relationship with the EU appeared. The only member of UKIP to be interviewed was asked about narrow issues relating to immigration policy.

It was clear from their appearances that the Conservative front bench during this period could only very loosely be regarded as ‘eurosceptic’ because they advocated on the programme in different ways and different times that they each wanted closer banking union to occur as a solution to the eurozone’s problems and believed that this was essential to Britain’s economic interests. George Osborne on June 7 expressed relief that the UK was outside the eurozone – and repeated his opposition to joining – but that aside, his overall approach and strategy was at odds with many backbenchers, as the comments of Mark Reckless and Peter Bone made clear.

THE ANSWER IS: FISCAL UNION During the survey period, as has already been noted, only one eurosceptic politician – Lord Lamont – was interviewed about the handling of the eurozone crisis. He appeared relatively briefly three times - for a total of around six minutes, 938 words - and on each occasion, was asked about procedural matters relating to the eurozone. He was not asked more general political questions such as whether it would be better if the euro was abandoned.

Input about the eurozone crisis from other commentators who were not politicians - for example, analysts in business news - that could be interpreted as eurosceptic was both spasmodic and short during the survey period. Contributions included a claim that the eurozone ‘medicine’ was killing the patient (May 11), and an assertion that full banking union was not feasible (May 31), On June 29, Peter Hahn of the Cass business school said that the UK might have to leave the EU as a result of steps towards banking union. Also on that day, Sonny Kapoor of Re-Define said the EU summit deal about closer fiscal union could leave the UK isolated, but also maintained that Britain could be at a disadvantage in being outside the eurozone. The combined

6 Cameron hit by rise in hostility to Europe: http://www.independent.co.uk/news/world/politics/ios-exclusive-cameron-hit-by-big-rise-in- hostility-to-europe-7768850.html contributions on this front were less than ten minutes of airtime in total – the words actually spoken by them that could be defined as ‘eurosceptic’ were far less.

Many in Greece, of course, felt that the EU’s/eurozone bailout solution to their problems was not working and that ‘austerity’ needed tempering with stronger measures to promote growth of the Greek economy. In one sense they were anti-EU, and in the statistics for the period they were placed into the category ‘Against specific EU legislation/action’. However, for the purposes of this analysis, they are not classified as being ‘eurosceptic’, because most advocates of change, including the Syriza party, were demonstrably also in favour of Greece staying within the EU. Their aim was to change Germany’s mind about austerity, and EU policies, not to exit the euro or the EU. No single contributor from Greece at any point mentioned an exit from the eurozone as the solution; the thrust was instead on Germany abandoning its allegedly strict fiscal restraint policies.

In contrast to this lack of genuine eurosceptic comment on the programme, there was a welter of opinion that advocated closer banking and fiscal union, together with the creation of Eurobonds, so that the ECB would in future be able to act directly to help struggling EU countries or banks.

Of course, this emerged as the proposed solution to the eurozone problems during the ‘summit’ that took place at the end June, and speculation that this would be the case started in the build-up to the meeting. But inspection of the transcripts shows that contributions on the theme also occurred throughout the survey period. The comment came from a variety of sources, ranging from Alistair Darling (April 24), Lord Mandelson (May 7), through former Belgian prime minister Guy Verhofstadt (May 16 and June 26), Herman Van Rompuy’s spokesman Richard Corbett (May 16 and June 28), former Francois Mitterand advisor Jacques Attali (May 7), former Helmut Kohl economic advisor Joachim Bitterlich (May 30) , to financial commentators, academics and analysts such as Steven Major, of HSBC and Professor David Bach (June 11)7.

This was not half-hearted, or qualified, talk. Jacques Attali said:

The euro will not survive in the next ten years, I would say even five years, if the eurozone doesn't move further into political integration. There is no currency in the world without a state, and the euro will follow the same fate.

EVAN DAVIS: Have you mentioned this to the Germans?

JA: And the Germans are, many Germans are in favour of that, and the Germans will understand that if they don't do that the euro will collapse, and the worst victim will be the German economy, because they are so much intricated (sic?) into the rest of Europe, but all the analysis coming from everywhere in the world demonstrates that the more fragile economy in a situation with a euro break-up is Germany.

Guy Verhofstadt said:

European leaders are saying that because they think that again they give some signs to the Greek public opinion. I think it's a bad thing, don't say to the Greeks what they have to do, the Greek people shall decide, they have decided already the first time, and they shall decide, hopefully in a different way, on 17 June. But that is not the task of the European leaders, European leaders already two years have taken half measures, have now taken a real . . . have no find (sic) a real solution for this crisis. And the reason is that this crisis is not about Greece, it's not about the public finances in Europe, it's because there is a lack of economic and fiscal union. We have a monetary union but no economic and fiscal union, we have no (words unclear due to interviewer speaking over).

In total, there were moiré than 20 contributions of this nature that advocated or supported banking union. Only two commentators (Mr Hahn and Mr Kapoor) voiced concerns in any detail that this would have adverse consequences.

Thus this was imbalanced reporting. The programme clearly was obliged to report the EU ‘summit’ decision, but editorially, given that, as Mr Kapoor especially noted, this would have serious consequences on the UK, it was also its duty – given the depth of eurosceptic opinion in the UK - to advance other opinions, and to

7 The list of such contributions is at appendix I. explore that impact. The attempts to do so could be described at best as minimal. At worst, they were derisory and reinforced the impression that editors had no desire to explore in any depth the views of those who had concerns about the further integration that banking union represented. Since the end of the survey period, it has emerged that the proposals for banking union are much more radical than were first presented in late June. In that context, the programme’s reluctance to explore this topic looks even more editorially negligent and biased.

AUSTERITY OR GROWTH?

The word ‘austerity’ figured in coverage 369 times, and was a major editorial topic, with presenter after presenter stating that this primarily German policy – also apparently endorsed, albeit ambiguously, by David Cameron – was under intense pressure to change from most parties in Greece and figures such as Francois Hollande because of the misery and hardship it was allegedly causing.

Yet despite dozens of mentions of austerity’s perceived failings, only one politician appeared who defended the strategy. Only minimal efforts were made to report the German perspective. There were numerous reports from Greece detailing the miseries of ‘austerity’ – but only two from Germany.

Undoubtedly, there were powerful tensions almost throughout the survey period in Greece over the perceived enforced austerity agenda, and in France, Francois Hollande frequently said during his election campaign that he wanted a move away from austerity and to position growth as the central pillar of eurozone fiscal policy.

Various commentators noted that while Greece wanted an end to austerity, Germany was sticking to its guns in requiring that it should be maintained.

This tension – between ‘growth’ and ‘austerity’ – was seen as a major theme by the Today programme, and reporters and presenters frequently mentioned the perceived dichotomy.

On this theme, typical of what was reported was that Gavin Hewitt noted on May 15 that the differences between Angela Merkel and Francois Hollande over austerity ‘could not be disguised’, Mark Lowen claimed on May 19 that there was a lot of anger in Greece against Germany for pushing through austerity measures. Tanya Beckett noted on April 30, that there was a groundswell of opinion that austerity had gone far enough, and on May 5, John Humphrys asked a UK academic if there was ‘real anger’ about austerity in Greece, suggested to a member of Pasok that the feeling against her party was because it had introduced the Greek austerity package, and observed the people of Greece had endured a rotten time because of austerity and it was going to get worse.

Evan Davis said on June 7 that because of her adherence to fiscal restraint as a solution to the problems of Greece Angela Merkel had ‘inherited’ the Iron Lady label formerly belonging to Mrs Thatcher.

In Britain, both Chuka Umunna, Labour’s industry spokesman and Ed Balls, the shadow chancellor, were asked when they appeared on Today about their attitude to austerity and growth. Both men stated they wanted growth policies and attacked what they said was the Conservatives’ unreasonable adherence to austerity.

Within the EU coverage analysed here, no Conservative was asked directly about austerity during the survey period, but It was reported on May 17 that David Cameron had said that he did not believe austerity and growth were mutually exclusive in dealing with the eurozone problems and that, while there was a need to stick with austerity, there could also be the promotion of jobs and other growth measures.

On May 7, the day after Francois Hollande was elected French president, Today’s reporting of the problems of austerity reached its high point, with eight separate substantial mentions of the issue. In the bulletins, Gavin Hewitt claimed that Mr Hollande had raised the standard against austerity. In Business News, Tanya Beckett asked her guest if eurozone policy would now change so that growth was at its core; she replied that it would.

At 6.48am, John Humphrys interviewed the daughter of a Greek businessman who had committed suicide because, it was claimed, he could not live with the consequences of austerity. Mr Humphrys said in his introduction that Greeks believed the power to run their country had been stolen when they had been forced to accept austerity. The daughter of the dead businessman said her country had been turned into a nation of ‘enslaved natives’. At 7.09am, John Humphrys observed the Greek election had delivered a message that the people had had enough of austerity. A few minutes later, during an interview of Lord Mandelson, Mr Humphrys asserted the message had been delivered ‘overwhelmingly’ by the Greek and French electorates that people were not prepared to accept the austerity that had been ordered by the European Union. Lord Mandelson said in response that there should be more nuanced austerity and more emphasis on growth. At 7.44am, Gavin Hewitt said that Francois Hollande had challenged austerity, the main German strategy for dealing with the debt crisis, and thereby Angela Merkel’s leadership. At 8.10am, Evan Davis said Francois Hollande had become a torchbearer to promote growth and employment, and half an hour later, he asked the audience to decide whether the French had voted against Sarkozy (and bling), unemployment or austerity. Was this approach straightforward reporting of what was actually happening in the eurozone? Clearly there was during the period in Greece especially a significant electoral backlash against austerity. Equally, Francois Holland did have differences with Angela Merkel over the emphasis that should be placed on growth rather than austerity. It was important that the news agenda reflected this.

A problem, however, is that the transcripts show that during the entire survey period, although reporters and presenters questioned whether austerity was working on a frequent basis, there were virtually no interviews with those who thought it was, or reporting of such alternative views. A rare exception was on May 30, when the historian Niall Ferguson said in passing that he thought austerity was working in the UK.

But as already noted, no Conservative politician was asked about this theme, and no one from any part of the political spectrum who was a robust eurosceptic. The only politicians that were asked about themes in this area were the Dutch MP Geert Tomlow on April 24, who said briefly that the problems of his country were not because of austerity but the amount of money that was going to help southern European states; and the German MP Michael Fuchs, who on June 18 – interviewed at 8.10am – bluntly said in response to questions from John Humphrys that austerity had worked and must be adhered to.

Mr Humphrys framed the following question in response:

Well yes, but the problem that they're making, and Mr Misotakis [a Greek politician appearing in the same sequence] has just outline this again, is the very, very strong view in Greece, not just that they can't take these cuts for very much longer, because so many people are suffering, but that they’re actually not working, and have been having the opposite effect on what was intended. Greece is becoming poorer, more and more people are losing their jobs, so therefore there is no growth and they must have growth. The question is whether your country is prepared to give them more time, are you? Mr Fuchs said that Greece must find a way of becoming more competitive so that it could trigger growth again.

The extent to which reporters were prepared to go in the conveying the problems of austerity was clearly illustrated by Mr Humphrys. Had this interview been one among many of those against austerity, his approach to Mr Fuchs would have been reasonable. Here – after his numerous other statements to the effect that austerity was not working, it looked partisan. Mr Fuchs was allowed to answer, but his words were – in effect – the only ones that clearly backed ‘austerity’ in the entire survey period.

Such partisanship was shown again on May 17, when Ben Wright, discussing David Cameron’s claim that austerity and growth were not mutually exclusive, asserted:

The fact is that Britain is in recession while eurozone as a whole is not. Public confidence in the benefits of austerity cuts seems to be slipping, as living standards are squeezed, one recent poll gave Labour a lead on the key question of economic competence for the first time in several years, and it seems that there are voters losing confidence that the government is called the big question on the economy right. Labour, of course, always argued for a slightly slower timetable for bringing down the deficit, and more spending now on jobs and measures to eliminate the economy.

Interviewing and commentary obviously allows the collation of partisan views in the formulation of what is said by presenters in terms of devil’s advocate questions or summing up. But such synthesis should be used with balanced care. Here it was not. On the subject of austerity, the overwhelming impression conveyed by Today in report after report was that it was not working and was under fire as a strategy. It is astonishing that only one alternative view was conveyed in interview throughout the period. At the same time, the Today editorial team seemed to be on a co-ordinated mission to show both the inhumanity and inexpedience of austerity and to act as conduits for the growth policies advocated by Francois Hollande, President Obama, the Syriza party, Lord Mandelson, Chuka Umunna and Ed Balls.

Today reported from Germany only twice during the period, ostensibly to canvass alternative views about Germany’s role in providing finance for the eurozone bailout operation. In the first, a very short package on May 8, Steve Evans first suggested that the voters in France and Greece had rejected austerity in opposition to policies driven by Germany. He compared Angela Merkel’s stance with that of Lady Thatcher (‘the lady in Berlin is not for turning’) but then claimed she was under mounting pressure – which she would resist – to think again about austerity. This was followed by three very short contributions from German economic experts totalling 120 words, less than a minute). The first suggested Mrs Merkel might allow more public investment through Brussels, the second claimed that austerity was not the goal of the policy, but the means to secure future growth through fiscal discipline, and the third was that France and Germany, despite apparent differences, would find ways of working together. On May 17, Justin Webb, after two vox pops (one of which was pro-austerity, but the other against), then spoke very briefly to two academics – both of whom thought the Greek problems must be tackled by Germany – and finally principally to an opposition Social Democrat MP who argued that Greece should be helped through alternative growth policies and that the approach of Angela Merkel was not widely supported in Germany itself.

The reports from Germany thus compounded rather than improved the problems of lack of adequate consideration of the fiscal restraint policies being pursued by Mrs Merkel and her government through the eurozone. Despite the opportunity, no German politician who endorsed the German policies was interviewed, but one who favoured ‘growth’ was.

From Greece itself, although there was obviously a battle between political parties about what to do over their austerity pact – with many calling to tear it up – no politician who appeared on Today from any political party in Greece defended austerity. All wanted re-negotiation of their bailout terms. Some explained why the pact had been signed, but all now said it was time for change. If there were those that defended it, Today did not find them.

UK POLITICIANS: WE WANT INTEGRATION!

Relatively few UK politicians appeared on the programme to discuss eurozone issues.

There were long interviews only with George Osborne (April 21 and June 7), William Hague(May 4), Lord Mandelson (May 7), Chuka Umunna (May 19), Ed Balls (May 21 and June 15), Kenneth Clarke (May 29), Alistair Darling (April 24 and June 25), David Miliband (June 28), Douglas Alexander (June 30) and David Lidington (June 30). As has already been observed, the former Conservative Chancellor of the Exchequer Lord Lamont was also interviewed briefly on three occasions.

Prime Minister David Cameron was not interviewed at all though he contributed five separate soundbites, each of which was strongly in favour of measures to strengthen the eurozone or against Greek exit from the euro. The Labour politicians who appeared between them attacked the Conservatives for not being more involved in the EU, for not promoting growth sufficiently, and for deciding in December to place Britain outside the main negotiations over the eurozone’s future. Chuka Umunna maintained that 3m British jobs were dependent on the EU, and Ed Balls attacked Germany for not being sufficiently flexible in coping with Greek dissatisfaction with the bailout terms. Lord Mandelson further observed that it could eventually be in the UK’s interest for the UK to join the eurozone providing reforms were implemented. Mr Balls was asked whether there would be a referendum on British membership of the EU, He replied that this was a possibility in future, but it would not be the right moment to do so now.

The Conservatives for their part, while maintaining that they had created a referendum lock to guard against the loss of UK sovereignty, argued strongly that the way forward for the eurozone was closer integration, and they expressed concern that if Greece left the eurozone, it would have serious consequences. For example, Chancellor George Osborne said on June 7:

Well, the banks have been one of the weak links in all of this, and actually the eurozone I think have tolerated weak, undercapitalised banks for too long, and part of running a single currency and following what I’ve called the remorseless logic of having a single currency, is that you have something more akin to a banking union than a financial union. So that, for example, Spanish depositors have confidence that they can leave their money in Spanish banks. So that, for example, there are common funds to recapitalise banks. So as, for example, as you say, in return for all of that there is tougher pan-eurozone supervision.

Kenneth Clarke’s contribution was to say that a referendum on EU membership should not be held because it would destabilise markets.

Evan Davis suggested that a Conservative chancellor calling for closer integration was a ‘paradox’ and also observed that no one in Europe had asked the citizens of Europe if they wanted these changes; he contended there was therefore a ‘democratic deficit’. Mr Osborne responded that there was but claimed that the referendum lock was sufficient safeguard of British interests.

Thus, overall and cumulatively, the contribution of UK politicians to eurozone programme items was strongly in favour of strengthening and centralising fiscal measures. The only dissenting voices – and representation of robust eurosceptic opinion – were those of Lord Lamont and a handful of Conservative backbenchers, who, as has already been noted, warned both that the eurozone structure was not fit for purpose and against further contributions being made available from the IMF to prop it up.

In their questioning of the various politicians, Today presenters on a few occasions – most notably in the interview of George Osborne on June 7 – put one or two eurosceptic points. But this was not at any juncture their main line of questioning, but rather an occasional, incidental approach.

The UK politicians’ input was therefore overwhelmingly in favour of closer integration, and there was only cursory editorial effort to include the eurosceptic perspective. Its flavour can best be summed up by one of the prime minister’s soundbites:

What I’ve sensed at this summit is that there is a fresh impetus, with the eurozone members, in terms of using all the mechanisms, institutions, firepower they have to stand up and support their currency. Britain, I think is playing a very constructive role in this. We understand that the single currency has a remorseless logic, which means that if it’s going to work properly, it’s got to have a central bank that stands behind it, a banking union that backs it up, fiscal transfers between stronger and weaker member states to make more sense of it. So we have got a totally intellectually strong and coherent case about what needs to be done.

Thus in this area, Today – at a time when debate about the future of the UK’s relationship with the EU was central to the news agenda, with many MPs and voices outside Parliament calling for a referendum on the various issues – presented mainly only one side of the debate. This was serious imbalance.

This strong europhile skew in a vital area of political controversy and debate was further underlined by the interviews held with eurozone politicians.

A clear editorial effort was made to include opinions of senior politicians outside the UK, to the extent that these were in the majority – 18 interviews during the survey period, compared to 16 interviews with politicians from the UK.

Analysis of the transcripts shows that most of the 18 expressed views which were demonstrably in favour of the EU and its policies, together with increased centralisation of the EU’s powers. Typical was an interview with former Irish government Dick Roche, who on June 19, asserted:

There were two fundamental problems [of the euro] in the architecture. One is that there wasn’t a strong fiscal spine, there still isn’t really a strong fiscal spine, but there’s a fiscal spine of some sort in the system as a result of the compact, the fiscal compact. But the second thing that’s missing – and it’s an important part of the jigsaw, because we still don’t have a European Central Bank that’s fit for purpose, it can’t control money supply, it doesn’t have federal powers to regulate the bank, it doesn’t have power to operate as a lender of last resort, it doesn’t have a cen—it doesn’t play that central role . . .

In similar vein, Jacques Attali, a former adviser to Francois Mitterand, asserted on May 7:

The euro will not survive in the next ten years, I would say even five years, if the eurozone doesn't move further into political integration. There is no currency in the world without a state, and the euro will follow the same fate.

Not all the interviews contained such overtly integrationist views. There was disagreement between speakers about whether the terms of the Greek bailout should be altered, with German politicians maintaining that they should not and members of the Greek Syriza party (especially) that they should. But that aside, all of the non- UK politicians were in favour of saving the euro, and endorsed – with only a few reservations – the course of dealing with the eurozone problems that evolved during the survey period.

EU PROBLEMS: WHAT PROBLEMS?

In the survey period, over 90% of Today’s EU-related feature coverage examined how the eurozone crisis was being handled. As already noted, the main editorial lines of inquiry were to explore whether austerity would be replaced with policies that promoted growth; whether Greece and other nations would continue to accept the burdens of austerity; and, towards the end of the period, the steps towards banking union.

By contrast, only limited editorial effort was expended in investigating problems in the way the EU operated or its impact on the UK or elsewhere. The full list of such EU ’problem’ mentions is in Appendix II. There were approximately 50 instances. The majority were short or incidental, and the transcript summary shows there was only minimal examination of the issues involved.

Ten were judged to merit an interview. These were (some are also discussed in other contexts):

• April 6 – Mark Reckless was asked why he thought the UK’s latest £10bn IMF loan to help the euro should not be made. • April 25 – a spokesman for the EU Commission (Richard Corbett) was interviewed about a proposed 6.8% increase in the Commission budget. • April 26 – Sarah Montague asked Nigel Farage of UKIP why voters were increasingly eurosceptic, though the main focus became immigration policy. • May 25 –Former Tony Blair advisor Jonathan Powell spoke about the growing number of government/EU summits and doubted their effectiveness. • May 29 – Kenneth Clarke was asked about why the Conservatives were in a mess over their policies towards the EU. • June 7 – George Osborne, in a lengthy interview about his approach to the eurozone crisis, was asked about why the peoples of Europe had not been asked about banking union, and whether there was a democratic deficit. • June 7 - Lord Owen was asked how he wanted to reform the EU – reverting to the original single market concept - and why he also thought a referendum on EU membership should be held to allow people to express views on the significant change that had occurred (He also made it plain that he was a strong supporter of the EU concept and wanted the acquis communautaire to continue). • June 12 – Hugh Fearnley-Whittingstall was asked why the EU’s discards policy was damaging to fish stocks. • June 13 – MEP Richard Ashworth was asked why he thought the European Commission’s demands for £15m in back duties for Chinese garlic imports were not justified. • June 30 – Pollster Peter Kellner was interviewed about future election prospects for UKIP.

But despite this coverage, there was only limited effort to explore the EU issues involved.

For example, an interview with Nigel Farage on April 26 - as was also noted in section one – was prefaced with an observation that euroscepticism was on the increase. But he was not asked any questions about the topic. The main focus instead was UKIP’s immigration policy – whether it would interfere with the labour market. So the EU ’problem’ – of voter discontent – was raised but not really examined.

Euroscepticism as a topic was also raised with a non-politician, the psephologist Peter Kellner, who on June 30 was asked by James Naughtie what the electoral prospects of UKIP were. This exchange covered significant ground in explaining to listeners that UKIP candidates were likely to do well in the next European Parliament election. But Mr Kellner was also adamant that UKIP would not make an electoral breakthrough in UK parliamentary elections on the ground that voters felt that other issues were more important. Thus, although this interview tackled in some depth a specific EU issue, it was only considered from one perspective, and Mr Kellner was both sharply negative and one-sided in elements of his analysis.

The exchange thus underlined that nowhere else during the survey period did Today explore the subject of euroscepticism, and no one held different views from Mr Kellner was invited o the programme to comment in this vital area of EU relations. As previously mentioned, on May 20, the Independent on Sunday8 published a poll which showed up to one third of Conservative voters were likely to vote UKIP at the next election and 46% said that they would vote for the UK to leave the European Union. The omission of discussion about euroscepticism was thus a major gap. In a very direct way, the future of the UK’s relationship with the EU and the eurozone was on the news agenda throughout the survey period. Of the other interviews, only two, the first with Mark Reckless (analysed in a previous section) dealt head-on with an EU-related ‘problem’ from the eurosceptic perspective. Mr Reckless said he did not believe that an additional UK loan to the IMF should be used to prop up the eurozone. The programme thus examined this issue, but it was the only example in the survey period where the views of robust eurosceptics (in that coverage of this topic also included very brief mentions of Douglas Carswell and Peter Bone) were taken into account. It should also be noted that the interview with Mr Reckless was relatively short (358 words – slightly over two minutes) and was done in parallel with a ‘balancing’ interview with the economist Ngaire Woods, who disagreed strongly with Mr Reckless and thought the IMF loan would be vital in rescuing the eurozone. In normal circumstances, that would be a reasonable component of balanced reporting, but its inclusion here underlined that opinions of eurosceptics such as Mr Reckless were scarcely mentioned, let alone explored by the programme; those who agreed with Ms Woods were frequently given the opportunity to air their views.

The second was with the MEP Richard Ashworth about the European Commission’s decision to press ahead with a claim against the UK for back duty on imports of garlic from China. The treatment of this was so extraordinary that is dealt with in a separate section. Suffice it to say here that Mr Ashworth was given the opportunity to attack the decision – and hence aired the eurosceptic perspective - but Evan Davis chose only to put to him only that the Commission was in right to pursue its demands. The examination was thus from only a very narrow standpoint and underlined that there was apparently no editorial desire to investigate such issues from a eurosceptic perspective.

The interview with George Osborne was in a category of its own, in that he accepted there was a ‘democratic deficit’ in the EU, but did not believe that banking union would trigger a referendum in the UK (under the ‘referendum lock’ legislation) because it would not involve a transfer of sovereignty. He thus admitted there was an EU ‘problem’ but did not think it warranted political action to solve. This underlined that the topic of a referendum was not discussed at all with those who held ‘robust’ eurosceptic views – and thereby showed in a different way the imbalance of Today’s treatment of these ‘problem’ issues.

Hugh Fearnley-Whittingstall, though sharply critical of the EU’s discards policy did not directly mention the EU itself.

In the remaining interviews in this category, the interviewees all clearly supported the EU. For example, Lord Owen, though wanting radical reform of the EU towards its original purpose of a single market, and a referendum on British involvement, made it plain that he supported the legal device (the acquis communautaire) that eurosceptics believe is at the root of most EU problems. Thus overall, the interviews, while registering that EU ‘problems’ existed, in most cases did not explore them from the eurosceptic perspective.

The other instances where EU-related ‘problems’ were mentioned were relatively fleeting, and did not contain any but the most cursory analysis. Eurosceptic concerns were sometimes raised, but not discussed further. On May 19, for example, reporter Steve Kingston said briefly that David Cameron was looking to knock on the head an EU proposal for a financial transactions tax. Plans by the newly-elected French president Francois Hollande to push to impose the tax were separately mentioned

8 Cameron hit by big rise in hostility to Europe: http://www.independent.co.uk/news/world/politics/ios-exclusive-cameron-hit-by-big-rise- in-hostility-to-europe-7768850.html

This underlined that the tax was feared by many in the City of London, and that there was a major fight underway to prevent its imposition. The Institute of Economic Affairs9, for example, had issued a report saying the tax could hit UK financial services revenues hard and threaten London’s primacy as a financial centre. But Today, by contrast, decided that the tax only merited a short mention, and mounted no analysis, even though the issue was clearly topical and of vital importance to the UK. A main development in the story – that MEPs had voted in the European Parliament had voted to go ahead with the tax (on May 24) despite the UK government’s objections and the specific representations of David Cameron – was not reported at all. There was time on the programme during the survey period to investigate whether Greece was facing a shortage of medicines as a result of ‘austerity’ but not to probe at all what eurosceptics (and others, including the Prime Minister) believed posed a major threat to the financial health of the UK.

In similar vein, on May 28, John Cridland of the CBI, who appeared in a Business News Update to discuss steps to improve the UK economy, asserted that a revival would be assisted if elements of the EU’s Solvency II laws were scrapped so that pension funds would resume investment in infrastructure. Simon Jack suggested the laws were there to make the insurance and pension industries more stable; Mr Cridland said they were too restrictive. Nothing further was explored on the topic.

Thus, another issue of central importance to British economic health was raised, but it was only in passing and the presenter asked only one devil’s advocate point of clarification before moving on. He could have asked why the laws were seen to be so negative – allowing Mr Cridland to expand further – but chose instead to put only the EU’s perspective. Mr Cridland responded bluntly that EU legislation was acting as a brake on enterprise, and he thus amplified his initial point slightly, but that was all.

This exchange thus illustrated another problem with the Today’s EU coverage. Eurosceptics are deeply concerned about the level and complexity of EU regulation. Yet on the programme when the topic was raised, presenters generally showed only limited interest in exploring further (as also happened with the Richard Ashworth interview already mentioned).

The same negativity and lack of interest in such matters applied throughout the survey period. The list of other broad mentions of EU regulation includes Bulletins on May 24, when it was said that the Conservative Free Enterprise Group wanted a cut in the number of EU regulations as part of a review of how to deal with the eurozone crisis; in discussion about how EU overseas aid was allocated, during which it was said that the EU was too loose in the way it distributed such cash (April 27); on May 30, when it was said that new flying hours rules could compromise air safety (May 30); In each case, coverage was relatively short, and dealt only tangentially with the issues of EU regulation.

Overall, therefore, the programme showed only cursory editorial curiosity about a main area of eurosceptic concern, and in the discussions that did occur did not probe much beyond the surface.

BUDGET INCREASE: WHAT INCREASE?

The relative lack of interest in EU matters was best exemplified on April 25. Bulletins that day related that the European Commission was expected to seek an increase in its budget for 2013 of 6.8%. It was also noted that a 5% request the previous year had been in the end held to 2%.

At 6.38am, correspondent Nigel Cassidy explained that the Commission was likening the increase to ‘a nasty credit card bill’ and was claiming it was justified because the EU was locked into legal agreements to pay for research and projects. He noted that they would be accused of double standards – especially from the UK – because they were pressuring states to spend less, but then also noted that a difficulty was that if they cut back on, for example regional development funds, it could affect growth. He stated:

…this is a real problem because all the time now, everybody’s starting to talk about how on earth can Europe get growth growing, and essentially the only way it can do that is by spending cash from the richer countries. We’re hearing this phrase ‘austerity backlash’ – countries feel the institutions need

9 The case against the financial transactions tax IEA: http://www.europeaninstitute.org/EA-August-2012/europes-north-south-dividea- stubborn-chasm.html to act, you know, as they’ve done in the past to try and save Europe, but they need money for that, and this is the very money that countries like Britain don’t want to spend.

Thus Mr Cassidy, while acknowledging that there would be opposition in some quarters to the proposed increase, finished with a strong point that this might be counter-productive in the context of ‘austerity backlash’. He included no opinion against the increase, and mentioned only briefly that such opinion existed.

The only other discussion about the matter was at 7.13am, when Evan Davis interviewed Richard Corbett, a spokesman for EU president Herman Van Rompuy. He suggested 6.8% was an ’awfully large number’. Mr Corbett said it was only the starting point of negotiations. Mr Davis suggested that the Commission would lose ‘a bit of credibility’ for going for such a figure when other countries were in ‘austerity backlash mode’. Mr Corbett said that the figure reflected past decisions taken by ministers of different countries about finance in a seven year framework. He said the Commission would thus justify the figure as being necessary to deal with unavoidable past commitments. With this, Mr Davis changed tack and suggested that therefore the real decisions about the Commission budget would be taken in the next cycle, after 2014. Mr Corbett said that economies of scale needed examining then, together with ways of ‘pooling resources’ so that money could be saved at a national level. Mr Davis said this sounded like another way of taking stuff away from governments and putting it to the EU. Mr Corbett said only governments could decide that and would not do so unless they were convinced it was needed. Mr Davis then asked if the 6.8% would actually happen. Mr Corbett said that there needed to be a sense of proportion, because only 2% of spending was by the Commission, whereas 98% was at a national level. Mr Davis suggested that this was a poor excuse. Mr Corbett said that it was vital to look at where money could be saved by acting on an EU level.

Thus in the Today coverage of this topic, Nigel Cassidy noted that the 6.8% figure would be met with opposition in the UK – but also noted that money was needed from the rich countries EU to combat austerity. Mr Davis suggested to an EU spokesman that the timing of the increase was bad and it was a very big number. Richard Corbett was given ample space both to say it was unlikely that this would be the final figure, but in any case, the spending decisions had already, in effect, been made by the ministers of national governments, so it was out of the Commission’s hands. He buttressed this with a plea for more federalism to create economies of scale and claimed that Commission spending was only 2% of that of national governments so this was small beer.

This brings into sharp focus how limited Today’s coverage of this topic was. This was not a minor issue: the Commission was asking for an increase of more than €15bn. Yet the actual figure was not mentioned at all by Today either in this item or the item presented by Mr Cassidy. Mr Corbett’s assertion about ‘only 2%’ was a glossing over by a public official of the sort that Today journalists should be continually on their guard against.

It was a deliberate attempt to disguise the real nature of the increase. The topic could have been more clearly explored by Mr Davis if the facts had been properly laid out and explored by the programme. Today devoted less than five minutes to discussing this important EU topic, and overall, it did soon a very limited basis. It did so only through the lens of a BBC reporter and an EU spokesperson. Mr Davis, while he did attack the timing of the proposed rise, otherwise allowed Mr Corbett to make his europhile perspective without challenge. This underlined that no-eurosceptic programme gusts appeared to analyse the increase. As such, the treatment of this topic was seriously imbalanced and under-reported.

LORD MANDELSON

Lord Mandelson was interviewed on May 7 after Francois Hollande was elected to the French presidency. The peg was that election plus the fact that Lord Mandelson had the previous week given a speech in which he had claimed that Britain would not be able to assert or meet its interests unless it was a fully active part of the EU.

Mr Humphrys therefore first asked him whether the UK should become a member of the eurozone despite its problems. Lord Mandelson replied that it should in a few years’ time providing the various problems had been sorted out. He claimed that Germany and France were acting to save the whole post-war settlement in Europe and claimed this would require more integration. He attacked the Conservatives for not properly supporting these moves and for going in a different direction. John Humphrys suggested that the elections in Greece had created greater chaos and this meant they could leave the entire project. He asked what impact this would have. Lord Mandelson said he was not convinced that would happen because Greece could not get funds elsewhere, John Humphrys interrupted him several times to say this is what many Greeks wanted. Lord Mandelson had heard Greeks speaking as if they were victims but in reality they were the victims of their own misfortune. What they needed to do was a matter of national necessity and not imposed on them from the outside.

Thus Lord Mandelson was able to say without interruption that Britain should be allowed to join the eurozone, that the survival of the eurozone was essential, that further integration must be affected, and that the EU had been, in effect, responsible for peace in post-war Europe, again without presenter intervention. He went on to savagely attack the Conservatives’ different approach to the EU – also without challenge – and then asserted that the Greeks had created the problems they were in, and nothing had been imposed on them by the EU that was not a result of those actions.

These europhile federalist views were highly controversial and partisan; Mr Humphrys could easily have attempted to dissect or asked Lord Mandelson to justify them. But he did not, preferring to intervene only to assert that many Greeks did want to leave the EU. By contrast, on April 20, when Mr Humphrys interviewed Mark Reckless about his objection to the UK providing more money to the IMF’s bailout fund, Mr Humphrys – although it was a much shorter interview – first contradicted Mr Reckless’s assertion that it was not the IMF’s role to provide funds in this way, then suggested that if they did not, if Spain and France ‘wobbled’ then we would ‘all suffer’. He also contradicted Mr Reckless’s view that it should be the ECB who helped failing economies in the eurozone, not the IMF.

Put another way, Mr Humphrys challenged robustly everything Mr Reckless said, but only one element of Lord Mandelson’s contribution, The latter was given considerable leeway to advance the ideas contained in his speech about the need for a more integrated EU and to attack the Conservative party (this without any form of challenge). This discrepancy of handling was magnified by the fact that Mr Reckless’s interview was the only one during the entire survey period with a ‘robust’ eurosceptic of the type that vehemently disagreed with Lord Mandelson’s views.

It is also important that although the row over the increase in IMF funding which Mark Reckless was interviewed spread over two days, the only other reference to it on the programme was that correspondent Tim Reed said that both Peter Bone MP and Douglas Carswell MP were among the many Conservative backbenchers were opposed to it. He added that some Conservatives disagreed to the point they saw the loan to the IMF as ‘essential’. Thus only very limited expression was given to this issue.

DUTCH GOVERNMENT

The treatment of EU issues was shown in microcosm on April 24 the day after the fall of the Dutch government over the nature and extent of austerity measures. Evan Davis introduced an interview with Geert Tomlow. He observed that Mr Tomlow was a former member of Geert Wilders’ ‘right-wing’ PPV party, and contended that austerity across the continent had – in effect – fostered the influence of right-wing parties and the rise of nationalism in both France and the Netherlands. His first question to Mr Tomlow was to suggest he had been ‘lecturing’ southern European countries about the need for austerity, but now did not want to accept it himself. Mr Tomlow replied that what people in Holland wanted was more money spending internally and less going to help those outside the country. Mr Davis asked if he would like some countries to leave the euro. Mr Tomlow said he would, and eventually would welcome the formation of a special northern unit within the EU. Mr Davis asked if the ‘the right’ was now going to do well. Mr Tomlow replied that although voters had been getting ‘more extreme’ for several years, people were now really scared and that would mean the centrist parties would likely form the next government.

Mr Davis conveyed in his introduction the idea that austerity had triggered a rise of extremist parties of the right, and of nationalism. He did not, however, explore this theme with Mr Tomlow, or give him the opportunity to rebut it, and instead simply suggested that those in the Netherlands who had toppled the government were pursuing an inherently contradictory policy of wanting austerity abroad but not at home. Mr Tomlow was given the opportunity to counter this, and he explained the reason why voters were upset by the current consequences of eurozone policy. He then introduced the radical idea that the way forward was a complete re-shaping of the eurozone so that voters’ unhappiness about disproportionate spending would be allayed.

Mr Davis did not pursue these themes at all, and Mr Tomlow’s total contribution was just 381 words, a little over two minutes. His concept of a north-south division of the eurozone has since been widely discussed, for example here10, but on Today, it was not pursued in the interview with Mr Tomlow or at any other time during the survey period. This omission was amplified by that the views of those with contrasting opinions about the future of the EU and the eurozone were only very rarely explored. Evan Davis had a golden opportunity here to open up and expand new lines of exploration. But he all but ignored it.

Instead, he moved on to interview Alistair Darling and first noted that he had ‘more experience and knowledge of the eurozone crisis than most people’ . Mr Davis first asked Mr Darling whether he agreed with the contention in the introduction that the whole (eurozone) system could have been designed to promote nationalism. Mr Darling responded this was always a risk, especially in countries with a history of ‘far right’ parties such as the Netherlands. But he added the main problem was that the eurozone had signed a ‘daft’ policy requiring austerity and that was killing growth. Mr Davis suggested that not having austerity would make it difficult to get the deficit down in some countries. Mr Darling explained that he was not advocating letting people off paying their debts, but repeated that a proper and credible plan was needed for stimulating growth.

Mr Davis asked whether the ECB should lend the money to prime the pump. Mr Darling said that the single currency meant that the richer parts had to help the poorer parts. This underlined that a single currency had fiscal, economic and political consequences that had to be recognised by all the countries in the eurozone. He asserted that it was also in Britain’s interests to recognise this because so much trade was with the eurozone.

Mr Davis thus first emphasised Mr Darling’s expertise then invited him to agree that austerity had spurred the growth of nationalism and the right. Mr Darling, a politician of the left, unsurprisingly agreed, and went on to advocate his own solution to the eurozone problems, which was essentially to promote growth rather than austerity. Mr Davis challenged him mildly by suggesting that he was advocating non-payment of debt, but Mr Darling was given ample room to expand his belief that this was not the case. His central contention was that the eurozone must be allowed to reform and become stronger and he argued this was essential because a large proportion of UK trade was with the eurozone.

Overall, Mr Darling spoke for 724 words – almost double the contribution of Mr Tomlow – and Mr Davis allowed him to put across and expand upon his pro-growth message with only one minor challenge. His only other challenge was to ask whether he agreed that the rise of nationalism and far right parties had been caused by austerity. It was not difficult to guess that Mr Darling would agree, yet he did not put the same point to Mr Tomlow, who might well have come up with a different explanation.

These were the only interviews about the fall of the Dutch government, and they illustrated vividly the narrowness of Today’s approach to the eurozone. The ‘right’ was cast rather simplistically as a by-product of austerity. Mr Tomlow was given only very limited space to explain his theory that elements of eurozone strategy in propping up southern European states were causing powerful negative pressures in the Netherlands. Mr Davis chose not explore this alternative perspective. By contrast, Alistair Darling was given ample time to deliver his pro-growth messages.

EU BUDGET GARLIC WARS

One of the few interviews about EU topics other than the eurozone crisis was on June 22, when Evan Davis explained that the European Commission was taking the British government to court for charging too low a rate of duty on imports of garlic from China. He explained that such duties went to Brussels and the Commission now wanted the UK to make up the shortfall. Mr Davis suggested to Richard Ashworth, the leader of the Conservatives in the European Parliament, that this was entirely reasonable because a mistake had been made. Mr Ashworth said that a demand for £15m was picking an unnecessary fight and was a disproportionate demand. Mr Davis said a principle was involved, that the UK should say sorry and put the £15m in. He suggested he could not see why there was a dispute. Mr Ashworth explained that the UK did collect money as agents for Brussels, but the issue here was whether the garlic was processed, part-processed or fresh. Mr Davis laughed. Mr Ashworth continued that it would be hard to justify why in hard times the matter was being taken to court when what was at stake was a technicality that should have been sorted out long since. Mr Davis asked whether he agreed the British had made a mistake or whether the position was that the right rate had been applied so the money was not owed. Mr Ashworth said that Inland Revenue claimed they had applied the correct rate, but also that this was six years ago so it was time to move on. Mr

10 Europe’s stubborn north-south divide http://www.europeaninstitute.org/EA-August-2012/europes-north-south-dividea-stubborn- chasm.html Davis said that if this was another country which had made an error, there would be outrage and he (Mr Ashworth) would be supporting the Commission. He added:

It’s just nationalistic, I mean, you’re just saying, ‘We don’t want to pay it, and we shouldn’t pay it and they should go away.’

Mr Ashworth responded that he would be looking critically at the behaviour of the Commission and whether it was using taxpayers’ money carefully, sensibly and proportionately.

There was no other discussion on the programme of the matter. Mr Davis clearly assumed in his questioning the perspective of the Commission, and Mr Ashworth was briefly allowed (300 words – two minutes) to put elements of his case to the contrary. The issue here is why Mr Davis so strongly took the position that Brussels was in the right – and that Britain should pay – and that the UK was in the wrong. He put the same point, with slight moderations four times. Clearly, the Commission’s perspective had to be conveyed, but as Mr Ashworth touched upon – there were other issues in contention, such as the delay in the case being brought, the way duties are imposed, the problems of the UK acting as agent for a complex duty tariff system. Many eurosceptics are also uneasy about the way the European Courts are being used to enforce EU law, in terms both of the expense involved and in the way the courts actually operate. They also claim that EU law is so complex that it is often difficult to understand. Mr Davis made no attempt to explore further these issues, instead, he unilaterally maintained that £15m was a reasonable demand, and even laughed when Mr Ashworth attempted to explain that the complexity of the regulations meant there was an error of understanding.

Mr Ashworth was the only UK MEP to be interviewed during the survey period and the brevity of this exchange underlined that in its EU coverage, Today made little effort to hold the various EU institutions to account. This could have been the peg to explore many of the eurosceptic concerns about the exercise of EU power, and – of course – for Europhiles to put across their counter-case. Instead, consideration of the matter was short, shallow and cursory. And Evan Davis wasted a valuable opportunity to explore a multi-faceted problem.

ENERGY: NOT GREEN ENOUGH

Another rare interview focusing on an EU-related issue was on April 10 when energy minister Greg Barker was invited on the programme to discuss his latest efforts to persuade his EU counterparts to cut their CO2 emission targets from 20% to 30% by 2020. Sarah Montague said in the introduction that the government had been accused on ‘back-sliding’ on its promises to be the greenest government ever, and pointed to a statement by George Osborne that the planet would not be saved by putting the country out of business. She first noted that the country had already met the target of a 20% reduction from 1990 levels and asked if Mr Barker now wanted to go to 30%. Mr Barker replied he wanted to send a strong message to industry that investing in clean-tech businesses of the future was an exciting and viable option, and that linked to that was a need for a strong carbon price. The price had fallen in recent months because of economic turmoil but a high price was good for business and did not harm competitiveness. Ms Montague asked if the only way to achieve that was to create demand by saying ‘we’ve got to do more’. Mr Barker agreed. Ms Montague asked if the reason the carbon price was depressed was that the economy was depressed. Mr Barker agreed and said he did not want to push the price so high that it hurt international competitiveness, but the balance had gone too far in the wrong direction. He asserted that the market for clean-tech was going to be worth ‘trillions of dollars’ by 2015 so there was a huge opportunity for Europe and the UK. Ms Montague asked if the Chancellor was on side with this. Mr Barker said he was an original cheerleader for emissions trading. Ms Montague then said:

(interrupting) But he’s also been seen as a Green Economy Denier, to use the phrase of Chris Huhne, who didn’t, who didn’t admit that he was talking about the Chancellor, but everybody presumed he was.

Mr Barker said he had never heard Chris Huhne talk about the Chancellor in those terms and claimed it was therefore a ‘bit of black propaganda’. Ms Montague countered:

(speaking over) I was deliberate . . . I wasn’t saying that he used it about the Chancellor, everybody presumed he used it about the Chancellor, not least because of what the Chancellor’s constantly publically said about . . .

Mr Barker said lots of people words into the Chancellor’s mouth that he never used. He had to put the British economy first but he was very much on board in terms of driving low-carbon competitiveness. Ms Montague asked if she could nail down the 30% target as something that would be achieved. Mr Barker said that was not correct. Britain would comfortably exceed the 20% cut target and wanted to raise that level of ambition to 30%, but would not do that unilaterally. Ms Montague said that the rest of Europe would not be ‘onside’ for that. Mr Barker said Britain was working patiently behind the scenes to change that and towards recognising that if the UK wanted to wean itself off ‘expensive’ oil and gas a cleaner economy was needed.

Thus, editorially, two strands were developed. Mr Barker was allowed to push the case – without significant interruption – that a higher CO2 price would be in Britain’s interests because it would cut CO2 emissions, not depress demand, and lead to the UK and Europe having a significant share in the high-tech clean energy market worth ‘trillions of dollars’. Ms Montague, for her part suggested in the intro and questions, that it had been said that despite what the government was saying, George Osborne was being described as a ‘Green Economy Denier’.

On both counts, the programme was skewed in its treatment of this topic. This was the only detailed coverage of a ‘green’ EU-related issue’ during the period. Thus, the only perspective on this theme that was explored was that of the government – specifically, that pursuing higher emissions targets would benefit the UK and lead to an investment bonanza worth trillions. Such beliefs are hotly contested in some quarters and some eurosceptics, for example, contend that the EU’s energy policies are seriously hobbling both UK and EU competiveness. Today researchers would have known, for example, that on March 12, Poland vetoed11 an increase in such targets at an EU meeting because it believed that they would seriously undermine the Polish energy market. They could also have established that the idea that ‘clean-tech’ developments will lead to permanent jobs and ‘trillions of pounds’ of investment opportunities is also hotly contested. Mr Barker’s assertions were therefore highly questionable, and yet Ms Montague made no effort to challenge him, and there was no occasion when the programme explored during the survey period the theme from a different perspective. As such, the programme was highly biased during the survey period in its approach to EU-related green energy issues.

GONE FISHING…

Today carried four items about a meeting of EU fisheries ministers on June 12/13. Apart from the continuing eurozone problems, this was the most intensive coverage during the survey period of a single EU issue.

The first feature was at 6.52am when Sanchia Berg compiled a package (multi-strand) report on the background to the meeting. In the introduction, she said that scientists had been warning for many years that cod was ‘at risk of extinction’ in EU waters. There was actuality from 1958 warning that new Icelandic laws could hit British fisheries. Professor Callum Roberts said that intensified fishing after the Second World War hit fish stocks and triggered moves by Iceland to extend its exclusive fishing zone to 200 miles. There was newsreel audio footage from the Cod War. Ms Berg said:

But Iceland got its way. Over the following decades stocks of cod in northern European waters fell dramatically. As Britain was now part of the European Community, fishing policy was agreed jointly. A decade ago, the European Commission was warning that cod was close to extinction in these waters. They called for change, the industry protested.

There was further actuality, in which a newsreader said that there had been warnings that 30,000 fishing jobs could be lost if haddock and cod quotas were cut. She said the Fisheries Commission had met in Brussels and was covering ‘massive’ cuts in catches ‘to save all species from collapse’. Ms Berg then said that in some areas fishing for cod was not now allowed, but it nevertheless got caught. Professor Roberts explained this was because juvenile cod were often caught by fishermen going for other fish such as prawns. Ms Berg asked what should be done. Professor Roberts replied:

Well, if you want to recover the animals that are overfished, then you have to make sure that you control all of the fishing methods that catch them, whether they be methods that are targeting prawns or whiting or some other fish, or not. So we genuinely have to afford protection to the cod, if we want it to come back, and that means controlling all sources of mortality for it.

11 Poland vetoes emissions cuts http://www.businessgreen.com/bg/news/2158714/poland-vetoes-eu-pathway-deeper-emissions-cuts

Ms Berg said that meant establishing fishing conservation areas where there was no fishing at all, She then spoke to Labour’s former fisheries minister Ben Bradshaw, who claimed he had tried to get such measures approved by the EU. He stated that too many countries were ‘in hock’ with their commercial fishing industries and despite efforts, he had not succeeded. Ms Berg concluded that it was unlikely that cod and haddock would disappear because they still existed in Norwegian and Icelandic waters – she asserted that they had managed their fisheries better.

Ms Berg thus seemed to be focused on establishing two main editorial points – that cod and haddock had been under threat in UK and EU waters for decades because of over-fishing and that fisheries experts (in this case Professor Roberts and Ben Bradshaw) believed that the solution was marine conservation areas. In fact, many fishermen and fishermen’s organisations believe that this overall approach, together with the quota-setting process, have become a ‘pantomime12’ which severely threatens their livelihoods. It is also the case that Professor Roberts, though undoubtedly an established academic studying fisheries, is also highly partisan in his approach because he is a declared patron13 of the campaigning green group World Wildlife Fund. Thus overall, Ms Berg edited together a highly skewed set of opinions on the way forward and made no effort in her script to suggest that there might be alternative views. A further shortcoming was that while, she acknowledged that the EU had a role in maintaining fish stocks, she did not refer at all to the strand of eurosceptic opinion14 that believes its management of fisheries policy has been disastrous for British livelihoods, stocks and conservation. Such views are not solely held by the ‘right’ in politics, for example, the Ocean2012 organisation15 states on its website:

Europe’s fishing grounds were once among the most productive in the world, but forty years of the (EU’s) Common Fisheries Policy have resulted in serious depletion of fish populations, ecosystem degradation and damage to species, habitats and sites protected by EU environmental legislation.

It is astonishing that Ms Berg did not mention the strong tide of opinion that blames EU policy as the main agent responsible for the depletion of fish stocks, particularly as that topic was the main theme of her report. In the next item, discussed below, the views of Barry Dees, chief executive of the National Federation of Fishermens’ organisations – which is committed to responsible fishing, and works with groups such as WWF, but is opposed to marine conservation areas – were briefly taken into account, but the extract from him only dealt with discards and did not address the issue of conservation areas; it therefore did not redress the imbalance in Ms Berg’s package.

At 7.49am also on June 12, James Naughtie first noted that fisheries ministers would be discussing the EU’s discard policy, which, he claimed, led to one in ten of fish catches being thrown back into the sea ‘dead or dying’. An edited extract from Mr Dees (120 words, 45 seconds) in which he said the industry itself was committed to reducing discards, but warned that this issue ‘which plays well in the media’ was being addressed at the expense of other more important ones. He then spoke to Hugh Fearnley-Whittingstall – who was said to be a campaigner for sustainable fishing – and asked what he wanted to achieved in this area. Mr Fearnley- Whittingstall said he wanted a discard ban, especially because fishermen were also engaged in the illegal practice of ‘high-grading’ which meant throwing back young fish back. Mr Naughtie asked if this was instead of being kept on the boat and then eaten. Mr Fearnley-Whittingstall agreed that this could be part of the process and then said that better fishing gear that differentiated catch size was also needed so that fishermen could be prevented from going back to their old ways. Nr Naughtie then brought in fisheries minister Richard Benyon, who first claimed that a discard ban could be in place by 2014 for some fish stocks. He added that there had been good trials of new methods and this cloud work as part of the reform of the ‘broken’ common fisheries policy. This was not where he would ideally start from, but this would be an important reform. Mr Naughtie then asked if he agreed that increased catches could be taken from 2013 on the ground that there had been sufficient recovery of stocks. Mr Benyon replied that there was good scientific evidence for a 140% rise in some stocks, but there were still other issues of sustainability. Mr Naughtie asked Mr Fearnley-Whittingstall if he also agreed with the idea of increased cod catches. Mr Fearnley-Whittingstall said he thought an increase in cod quotas would be rash because overfishing

12 Fishermen angry…at decision to limit days at sea http://www.telegraph.co.uk/news/worldnews/europe/eu/8963093/Fishermen-angry-at- European-Union-decision-to-reduce-number-of-days-at-sea.html 13 Proessor Callum Roberts http://www.wwf.org.uk/what_we_do/about_us/more_about_wwf/wwf_uk_council_of_ambassadors/professor_callum_roberts.cfm 14 UKIP Policies http://www.ukip.org/content/ukip-policies/2342-fishing-ukip-policy 15 Turning the Tide http://ocean2012.eu/pages/4-opportunity-for-change

was still going on, and there was a delay in halting discarding of white fish. Mr Benyon said that some countries wanted to wreck the whole process, but Britain was committed to reform and wanted the white fish measures imposed by 2016.

This sequence ran for around six minutes, and the main editorial purpose was on the one hand to explore Mr Fearnley-Whittingstall’s continuing concern that cod was being over-fished and on the other to investigate what the fisheries minister’s view was on the likely reforms. What emerged was that Mr Benyon claimed a strong new agreement was being reached that would end discarding, and Mr Fearnley-Whittingstall said that more caution should be exercised, and that in the interests of conservation, stricter quotas should be maintained.

In the third item on the quota meeting the following day (June 13). Roger Harrabin said in Bulletins that fisheries policy had brought the EU into disrepute. He reported that agreement had been reached to phase out discards and that for the first time, catches would be limited to what the oceans could sustain. In a later interview with Justin Webb, he suggested that the change had come about because of a television film by Mr Fearnley-Whittingstall.

Overall, therefore, the EU came in for explicit criticism for allowing discards. But its role in developing the concept as part of fisheries policy was scarcely touched upon either by Mr Harrabin or Ms Berg. This could have been an opportunity to explore in more depth the difficulties involved, especially with representatives from the UK fisheries industry. Instead it became a platform for Mr Harrabin to say that fisheries must become sustainable and for a supporter of marine conservation zones to put his case. As usual in Today’s coverage, the eurosceptic perspective was virtually ignored.

DIVIDED TORIES

The Today programme has consistently over many years portrayed the Conservative Party as being split over the issue of Europe. By contrast, it never explores the extent of differences within Labour on the topic, and very rarely speaks to those Labour MPs who class themselves as robustly eurosceptic. During this survey period, none of these figures appeared, but the programme – as is usual – made reference to Conservative differences on the topic. On April 9, James Naughtie noted that it was the twentieth anniversary of John Major’s 1992 general election victory. He said it led to a government ‘dominated by painful decisions over Europe, most of which stemmed from internal differences over the Maastricht Treaty’. He spoke to three figures from that era, Lord Howard, Sheila Gunn, a press secretary to John Major, and Kelvin Mackenzie, the former editor of the Sun. Lord Howard said the problems over the ERM laid the foundations of future prosperity. Ms Gunn said it was difficult to imagine the level of enmity over Europe between elements of the party. There was lots that could have been explored about John Major’s administration, good and bad; but Today took the clear editorial decision to focus on divisions over the EU. Of course, this was an important issue during the period, but that it was chosen here underlines again the Today programme’s focus on reminding its audience about Conservative divisions without allowing those who are eurosceptic to explain their position.

APPENDIX I FISCAL UNION CALLS

April 24 7.13am - Steven Major of HSBC And markets are really waiting to see whether there’ll be a fiscal union and common issuance, and if there isn't sometime soon and there will be more pressure on the eurozone.

April 24 – Alistair Darling: Well, the ECB has been effectively lending money into the system, we come back to the same old problem: if you have a single currency that has implications, it means that the richer parts have to help the poorer parts make the adaptions they need to help them become more competitive, and that is what a single currency means. If you've got a single currency then you've got, it has fiscal, it has economic consequences and political consequences, and you know, all countries within the European Union, within the eurozone have to recognise that. And of course, it's in Britain's interests that they recognise that because we trade and so much on this, and indeed, if you look at the sheer size of the eurozone it is critical to the world prospects for growth, so this is unjust, it isn't just a parochial matter if you like.

April 25 – Richard Corbett (spokesman, Herman Van Rompuy): Research, expensive research programmes for instance, if we pool our resources together we can all save money nationally, and those are the sort of things that we should be spending money on at European level.

May 7 – Lord Mandelson argued that greater integration would be required to solve the euro’s problems.

May 7 - Jacques Attali, a former adviser to Francois Mitterrand: The euro will not survive in the next ten years, I would say even five years, if the eurozone doesn't move further into political integration. There is no currency in the world without a state, and the euro will follow the same fate.

May 14 - it was said in Business News that eurozone bankers were now openly talking of a Greek exit from the euro. Peter De Keyzer of BNP Paribas Fortis said this would be disastrous for Greece and the EU.

May 16: At 8.10am, Guy Verhofstadt, a former prime minister of Belgium, called for more integration to deal with the Greek crisis, and claimed it had happened because there was a lack of economic and fiscal union. Richard Corbett said that to promote growth within Europe, more needed doing to deepen the single market. Dr Eurydice Georganteli, an archaeologist, said at 8.47am that she hoped that the euro became a much more competitive currency that was part of culture and society.

May 19 – Chuka Umunna claimed that 3m jobs in the UK depended on the EU.

May 24 – Christian Schulz, senior economist at Berenberg Bank, said markets wanted fiscal and monetary union, or an unravelling of the eurozone.

May 30 – Joachim Bitterlich former economic advisor to Helmut Kohl, said that it was vital if all European countries had the same tax regimes, and the EU had failed to harmonise budgetary and fiscal policy in the 1990s with dire consequences.

June 5 – Jeremy Stretch of CIBC said there was hope that a conference of EU finance ministers would led to a more pan-European approach.

June 6 – Gavin Hewitt said that an aid package to the Spanish banks was being seen by the European Commission as a step banking union. At 7.51am, Stefaan de Rynck, spokesman for Michel Barnier, the EU commissioner responsible for internal market and services, said that banking union was an essential part of the political vision for the future of the eurozone.

June 7 – Chris Morris was asked if there was an flexibility in Mrs Merkel’s approach. He said that Mr Cameron believed that flexibility and growth could go together. He added that both Mr Cameron and Mr Osborne found themselves in the great paradox of arguing the federalist case. They were two ‘avowed eurosceptics’ saying that fiscal union was required. Terry Smith of Tullett Prebon said the eurozone would not survive unless there was a single banking authority. He noted that those who said the UK would not survive outside the eurozone had been proved comprehensively wrong. Howard Davies agreed that banking union was essential.

At 8.10am, Evan Davis said that the EU crisis could hurt exports and affect our biggest industry, banking. George Osborne said that there need to be greater harmonisation and integration of fiscal policies to make the euro work. This was remorseless logic. He also said that the UK would never be part of the euro. Lord Owen was interviewed about his call for a referendum. He said the country felt cheated that there had not been a referendum over Lisbon. Up until now, people had been generous about allowing changes to deal with the eurozone, but it was now vital to know what would be done to protect the single market and about the prevention of it being run by a single government.

June 11 – Professor David Bach, a Spanish economist, had said that more eurozone integration was needed if Spain’s economic problems were to be properly addressed. At 8.10am, Robert Peston said the eurozone problems would be solved if there was a political union in Europe, and the moves towards political union were seen by ‘most people’ as essential to finding a lasting solution. But progress was millimetre by millimetre. He said that sooner or later there had to be a ‘grand solution’ – and ‘we all can agree that the sooner it’s solved the better’.

June 15 – Paul Mortimer Lee of BNP Paribas and suggested that all requests to Germany for help had been turned down. He also claimed that if Germany did not act faster, ‘the whole thing is going to blow up’, and that because Germany’s response had been negative, the euro crisis appeared to be worsening. Mr Mortimer Lee said that Germany was not giving way in terms of fiscal union or Eurobonds Mr Davis asked whether the ‘slow speed’ of the Germans would be affected by market panic. Mr Mortimer Lee said the aim was fiscal and monetary integration but that would be in the long term. What was now needed was a roadmap towards that integration.

June 16 - Olaf Boehnke, the Berlin head of the pan-European think tank The European Council for Foreign Relations, said that a new package of reforms, including fiscal union and stronger powers for the European Parliament, had the full support of Germany. At 8.30am, financial analyst Mike Bradshaw said that the return of Greece to the drachma would create numerous problems for Greece.

June 18 – Gabriel Stern of Exotix said that unless Europe did something radical (federalism) the financial troubles would continue. Simon Jack agreed that the agenda was about backing union. And Mr Stern said it was the logical conclusion towards Eurobonds.

June 19 – Simon Jack suggested in Business News to former Irish government minister Dick Roche that the solution to problems such as that of Ireland was increasingly seen as fiscal integration. Mr Roche agreed.

June 20 – David Cameron was quoted as saying that the remorseless logic of the euro was that it needed a stronger central bank. Justin Urquhart Stewart of Seven Investment said that banking union needed to be in place to solve the underlying disciplines of running a currency.

June 21 – Santiago Carbo Valverde, Professor of Economics at the University of Granada, said that it would be better if the new capital injection offered to Spain came directly from the European Financial Stability Facility, and thus avoid government underwriting.

June 22 – Robert Peston noted that the IMF was calling for integration of government to deal with the euro crisis. Virginie Maisonneuve, Head of Global and International Equities at Schroders Asset Management, said that further structural and banking integration were logical steps. Evan Davis said at 6.35am that the four biggest eurozone countries were meeting to discuss tying the zone closer together.

June 26 - Steven Saywell of BNP Paribas said that the markets had rallied on talk of eurozone fiscal union and noted that the FT was talking of sweeping new fiscal powers. Guy Verhofstadt, former Belgian Prime Minister, now leader of the Alliance of Liberals and Democrats in the European Parliament, said at 8.42am that agreement on the EU being able to re-write national budgets was essential. He claimed it was impossible to have a single currency without fiscal union, and that union should include Eurobonds. Justin Webb suggested that this did not have the support of the peoples of Europe. Mr Verhofstadt said that democratic legitimacy was provided by the European Parliament. Mr Webb asked if this was enough. Mr Verhofstadt said it was.

June 27 – Simon Jack, discussing fiscal union, said the UK had a list of safeguards it required in the event of it happening. Chris Morris noted that a draft document circulating among ministers included proposal for much tighter fiscal union.

June 28 – Chris Morris said that EU leaders were discussing proposals about closer banking union. Christopher Morris, noting that Francois Holland’s deputy had claimed that that there was a requirement to surrender some national powers to create an integrated EU treasury, included comment from a French analyst who said that there must be agreement on the topic. John Humphrys then interview Herman Van Rompuy spokesman Richard Corbett and asked him if more union was inevitable. He said it was, and would make the EU work better. Mr Humphrys suggested that Germany was against the changes. Mr Corbett said that it why it was necessary to have talks. Mr Humphrys suggested that the crisis was getting worse. Mr Corbett said rescue mechanisms had now been put in place and would work.

June 29 – James Shugg of Westpac Bank said he was tremendously impressed and it showed that decent decisions could be made. But he said that it was not sufficient because fiscal integration was also required. At 7.49am, Peter Hahn, of the Cass Business School, said the agreements might mean that the UK would have to leave the EU. But he said that banks would probably want to stay in. At 6.35am, Chris Morris said that the agreements were linked to Germany getting its wish for more centralised control of the eurozone. He commented that a banking analyst had said that if sovereignty was kept, the euro would be lost. At 7.17am, Sony Kapoor, of Re-Define said that the deal could leave the UK banking sector and the UK itself isolated. He maintained that the future of the UK in the EU should not be re-assessed. He also claimed that the City of London’s status was not under threat. Gavin Hewitt commented at 8.31am that the markets had wanted to know for a long time what really stood behind the currency. The agreement showed that the EU wanted to make the euro an ‘irreversible pact’. Robert Peston said that Angela Merkel had made massive concessions and it meant that fewer demands would be made of indebted countries. Mr Hewitt said that in return for her concessions, Mrs Merkel had won stronger central fiscal control.

June 30 - David Lidington, minister for Europe, said it was in Britain’s interests to support the EU agreement.

APPENDIX II ANTI-EU STATEMENTS

Anti-EU Statements

1. April 9 – Sheila Gunn noted the level of enmity that existed within the Conservative Party about the EU. 2. April 11 – Steven Major noted that Spain, unlike the UK, which was not in the eurozone, was trapped in not be allowed room to deal with its debt problems. 3. April12 – it was said by a Spanish economist that Europe lacked a growth policy that would deal with Spain’s problems. 4. April 14 – Justin Webb asked Tim Montgomerie whether the Conservative high command had lost its ability to speak directly to the Conservative right about euroscepticism. Mr Montgomerie did not reply. Lord Lamont said Spain was in critical trouble. 5. April 20 – correspondent Andrew Walker said that George Osborne would get in trouble with ‘eurosceptic forces’ within the Conservative Party if he handed more money to the IMF. 6. Mark Reckless attacked the IMF loan. 7. April 21 – Douglas Carswell attacked the IMF loan as ‘bailout bull’. Later in the programme, Peter Bone was said to have described the loan as ‘bonkers’. But Andrew Tyrie (chair Treasury Select Committee) was said to support the loan. George Osborne dismissed criticism of the loan. 8. April 23 – it was said there was a lot of criticism from Conservative backbenchers about changes to the House of Lords – they wanted an EU referendum instead. It was noted that some Greeks were taking action on austerity as a ‘crime against humanity’. Gavin Hewitt noted that the French National Front wanted to ditch the euro. 9. April 24 – In Yesterday Parliament, Peter Bone was quoted as attacking the UK’s latest IMF loan ‘to save the failed euro’. George Osborne’s put-down reply was also quoted. Geert Tomlow said that Dutch voters were not happy propping up the rest of the eurozone. 10. April 25 – Evan Davis asked Richard Corbett whether it was right for the European Commission to be pitching for a 6.8% increase in budget. 11. April 26 – Sarah Montague noted in her interview of Nigel Farage that British voters were increasingly eurosceptic. He attacked EU immigration policy and said the UK could say £50m through not being a member of the EU. 12. April 27 – Deanne Julius, formerly of the Bank of England Monetary Policy Committee, said it was a good thing that the UK was not part of the euro. Vicky Pryce agreed. David Loyn said Malcolm Bruce, head of the House of Commons international development committee, had said that EU money described as overseas aid was not efficiently spent and also was not really development aid. 13. April 28 – it was noted that a Commons parliamentary committee had said too much EU money was going in aid to Turkey as its economy was doing very well. 14. May 4 – it was said that Francois Hollande believed current EU policies had not created enough growth. Lord Teverson claimed that Germany must start pulling its weight as a defence force within the EU. Nick Robinson said that UKIP was exerting force on the Conservative Party to move to the right on a range of policies. Evan Davis suggested to William Hague that the Conservatives should become more populist in its approach to Europe. 15. May 7 – it was said that the Conservative Home website had published an alternative Queen’s speech that included a call for a referendum on the EU. The daughter of a Greek suicide told John Humphrys that the Greek government could no longer make decisions on behalf of the people – the country had become a colony of enslaved natives. John Redwood said the Conservatives wanted to tackle the might problem of Europe. 16. May 11 - Ian Powell of PwC said that confidence in British business was tempered by uncertainty about the eurozone, which fed fears about liquidity. 17. May 14 - Elena Panaritis, an economist, claimed that Greeks were being forced to work for less and less money. 18. May 15 - Jamie Dimon of JP Morgan Chase said the markets had faith in elements of EU financial regulations. It was reported that EU regulations about trade in medicines were creating shortages in the UK. 19. May 16 – Justin Webb included vox pops critical of the euro. Justin Webb asked Herman Van Rompuy spokesman Richard Corbett why financial policies could not have been changed a year ago. 20. May 17 – Sir Peter Tapsell (Yesterday in Parliament) asked whether Angela Merkel now regretted not firing her big bazooka a year ago. David Cameron would warn that more needed doing to save the euro. Lord Lamont warned that the Greek crisis was ‘extremely threatening’ to the UK. 21. May 18 – it was said in a report that some Spaniards were beginning to think in terms of the return of the peseta. 22. May 19 – Reporter Steve Kingston said that David Cameron wanted to knock on the head a French proposal for a financial transactions tax (this was also mentioned briefly on May 23 and May 24). 23. May 23 – George Grodski of Legal and General said there were lots of investors pulling out of the euro, especially those from the US – and many of these investors were pulling out of the EU altogether. 24. May 24 - Later bulletins said the Conservative Free Enterprise Group of MPs had urged the government to draw up contingency plans for if the euro failed. These should include freezing benefits, making small firms exempt from employment regulations and issuing infrastructure bonds to draw in international funds for UK capital projects. Stephen Evans said the EU summit had been distinguished by the divisions between France and German over issues such as Eurobonds and between France and the UK over the financial transactions tax. 25. May 25 - Former Tony Blair advisor Jonathan Powell spoke about the growing number of government summits and doubted their effectiveness. 26. May 28 - John Cridland of the CBI said that the UK government should act to get rid of the EU Solvency II laws so that pension funds would start investing in infrastructure projects again. 27. May 29 – John Humphrys suggested to Kenneth Clarke that the government was in a mess in its policy to Europe and out of touch with public opinion. 28. May 30 – it was said that new EU proposals on flying hours could compromise air safety. 29. May 31 - Megan Greene, eurozone economist at Roubini Global Economics, warned that fiscal union would be political union via the back door and said she did not think proposals on fiscal union were practicable. Declan Ganley, of Libertas, said that the Irish should vote against the new fiscal EU treaty because it would lead to loss of sovereignty. 30. June 2 – Robert Peston said the eurozone crisis had hit the performance of the UK manufacturing industry. He also suggested that fiscal union was the solution to the eurozone problems. 31. June 6 – James Naughtie suggested that many countries in the eurozone did not want to go as far as banking union. 32. June 7 – George Osborne wanted safeguards for the single market if there was closer banking union. It was noted that Mervyn King, governor of the Bank of England, had said that the eurozone was tearing itself apart. Terry Smith of Tullett Prebon said that those who had said the UK could not survive outside the eurozone had been proved comprehensively wrong. George Osborne, interviewed by Evan Davis, said the eurozone had tolerated weak banks for too long and said the UK had not joined the euro because it would lead to loss of national sovereignty. Evan Davis suggested no-one had asked the citizens of Europe about banking union. Mr Osborne said the EU had a democratic deficit, but this was not the case in the UK. Lord Owen argued that the single market needed re-casting and shoring up, and also that a referendum should be held about EU membership. 33. June 11 – Kathleen Brooks of Forex.com suggested that banking debts were essentially the same as public debts and the Spanish bailout was effectively being underwritten by the taxpayer. 34. June 12 – The EU fishing quota policy was said to be encouraging discards and negatively affecting the UK fishing industry. 35. June 13 – Roger Harrabin said that fishing policy had brought the EU into disrepute and warned that catches should be limited to what the oceans could sustain. Hector Sans, the outgoing chief executive of the FSA, said that a centralised EU banking system would not be workable. 36. June 14 – in Business News, it was said that some in Greece were looking forward to the return of the drachma. 37. June 16 – Simon Heffer noted that Enoch Powell had warned that monetary union could not be achieved without political union. 38. June 22 – MEP Richard Ashworth attacked the European Commission for taking action against the UK over Chinese garlic imports. 39. June 29 - Peter Hahn of the Cass Business School warned that under the banking proposals, the government would lose power over UK banks. The consequence that there should be a decision on whether to leave the EU. He warned that US banks in London could move to Paris. Sony Kapoor, of Re-Define, said that replacing the European Banking Authority with the ECB could freeze the UK out, because the EBA was previously a collection of national supervisors with limited powers. He also warned that the UK should ask whether it had a future inside the EU. 40. June 30 – Nigel Farage said: We’ve just finished the 19th summit since David Cameron's been Prime Minister, they've made some marginal changes but in reality nothing has been solved that all. The extraordinary thing, from a British perspective, is to see David Cameron cheering them on - Cameron's the one saying, ‘You must push on to a full political union, you must abolish democracy in the nation states of the eurozone,’ and I think most people in Britain look at this and say, why on earth are we encouraging them to go down this route? 41. Peter Kellner said that UKIP would become bigger at the next EU elections, but would not achieve electoral breakthrough.

APPENDIX III SUMMARY DOCUMENT

April 9 8.32am: James Naughtie said that it was the twentieth anniversary of John Major’s 1992 general election victory, leading to a government dominated by painful decisions over Europe, most of which stemmed from internal divisions over the Maastricht Treaty. Lord Howard said his major mistake happened when, as Chancellor, he took the decision to join the ERM, but he left it when he was prime minister. Lord Howard said:

But the circumstances of the departure were so dramatic and so… traumatic, that they were seen as a tremendous disaster. In fact, it was that act which laid the foundations for the prosperity which we then enjoyed for the next fifteen years.

Sheila Gunn, his former press secretary said that it was ‘hard to imagine’ the level of enmity between sceptics and Europhiles. Kelvin MacKenzie contended there were two John Majors, one very affable, the other very ‘chippie’ because he could not control his party:

Secondly, there was the issue over the ERM, which was a complete if the catastrophe for the country and the Tory Party, which he tried to take on, he tried to take on the financial muscle of the world and saying we’re staying in this snake-like entity . . .

Lord Howard agreed that the ERM problem shattered the Conservative Party’s reputation for economic competence. Mr MacKenzie said:

The one of course which I obviously remember was on the night of the ERM, in which we’d seen interest rates go up from something like 4% to about 15% in a matter of hours, in the most bewildering night of economic maelstrom I’ve ever seen, and my phone goes, and I’m sitting there, actually, I’m with a guy called Trevor Kavanagh who’s still a political writer for The Sun . . .

JN: We’ve heard of him.

KM: And the phone goes, the phone goes and it’s Major on the phone, and I couldn’t understand that, so I took the call anyway, and so he said, (imitates Major’s voice) ‘Hello Kelvin’, and I said, ‘Oh, hello prime minister.’ He said, ‘Tell me,’ he said, ‘how is it going to play tomorrow’ – this is a reference to how we were going to report the ERM exit, and he said, and so I said, well I’ve got a rather large bucket of merde on my, on my desk here and I’m going to pour it all over you, prime minister. In which case there was a long pause and he said, ‘Oh, you are a wag.’ But of course, we did pour it all over him.

April 9 8.43am: Glenys Kinnock noted that EU sanctions against Burma would be reviewed.

April 10 8.22am: It was noted that David Cameron would visit Burma amidst a review of EU sanctions imposed on the country.

April 10 8.50am: Sarah Montague noted that – against a background of ‘backsliding’ claims about the government’s commitment to green policies – energy and climate minister Greg Barker would try and persuade EU countries to cut further their CO2 emissions. Mr Barker said he wanted to push the EU-wide cuts to 30% and also increase the price of carbon after it had fallen to record lows because of the eurozone crisis. Mr Barker contended that reducing the CO2 targets would boost the price because it would cut the number of carbon credits available on the markets. Ms Montague said:

Isn’t there a problem here, that, as you say, the carbon price is depressed because the economy is, and that’s also the reason that our carbon dioxide emissions are lower?

GB: Yeah, absolutely Sarah, I mean, and the reason that we have a market is so there is this linkage. We don’t want to push the carbon price up to such an extent that it starts to really cut into and hurt our international competitiveness. But we think the balance has gone too far now in the wrong direction, and there is scope actually to take advantage of the low carbon price to achieve these gains now. And if you look at the global market for clean-tech it’s estimated that by 2015 it’s going to be worth, you know, trillions of dollars. And as a result there’s a huge opportunity there for Europe, but particularly for the UK.

SM: Can I just ask, have you got the Chancellor, George Osborne on side with this?

GB: Yeah, I mean the Chancellor is a, is a . . . one of the original cheerleaders for emissions trading, in opposition he made clear that a strong carbon . . .

SM: (interrupting) But he’s also been seen as a Green Economy Denier, to use the phrase of Chris Huhne, who didn’t, who didn’t admit that he was talking about the Chancellor, but everybody presumed he was.

GB: Well, I’ve never heard . . . I’ve worked with Chris Huhne all the way through government, I’d never heard him use that phrase about the Chancellor. I think that’s a bit of black propaganda. The fact of the matter is, the Chancellor . . .

SM: (speaking over) I was deliberate . . . I wasn’t saying that he used it about the Chancellor, everybody presumed he used it about the Chancellor, not least because of what the Chancellor’s constantly publically said about . . .

GB: Well, lots of people, lots of things, lots of people project all sorts of things into the Chancellor’s mouth that he never says. The fact is, the Chancellor is very realistic . . .

SM: Okay . . .

GB: He of course puts the British economy first, but where there are sensible measures to be taken .

SM: Okay, so Britain . . .

GB:. . . to drive low-carbon competitiveness, he’s very much on board.

SM: Can I just nail down then? Britain will cut its carbon dioxide emissions by 30% by 2020?

GB: No, that’s not correct. We’re going to comfortably exceed our 2020 emissions target as it stands, which is 20%, and we think we’re in a good position to raise that level of ambition to 30% . . .

SM: So why . . .

GB: But as, as the Chancellor said, we’re not going to do that unilaterally, we want to do that in conjunction with the rest of Europe.

SM: And we’re not going to get them onside with this, are we? GB: Well, we’re working patiently and quietly behind the scenes, making not just the environmental case, but the economic case as well, looking at the huge growth in clean, in erm, low carbon and clean-tech markets, not just in Europe but around the world, and recognising that if we want to wean ourselves off expensive imported oil and gas, and remember it was the massive increase in gas prices last year that put a break on economic activity . . .

SM: Right . . .

GB: If we want to do that, we need to be a cleaner economy

.

April 11 bulletins: These noted that a Greek general election had been called and it was likely that the government would lose ground to anti-austerity parties ‘riding high on a wave of public hostility to the cuts’. It was said that instability in Greece could plunge the eurozone back into crisis.

April 11 business news 6.15am: Mark Lowen, noting that the Greeks were due to go to the polls on May 6, said that it had become an angry nation likely to vote for the anti-austerity parties. He noted that the government that did come to power would have to make a further €11m in savings, leading to further unrest. Simon Jack asked whether the new government would feel obliged to keep the commitments to the EU austerity measures made by the existing and previous governments. Mr Lowen, while noting that the New Democracy party had been against austerity, now said it would honour the commitments, though it would be seeking wriggle-room. He noted that Greece was still Europe’s moist indebted nation and that threatened the stability of the eurozone. Bronwyn Curtis of HSBC then said that the markets were being unsettled by Spain’s problems with its deficit targets. Andrew Bell from Witan Investments Trust said:

. . .the fundamental problem within Europe is that they're trying to do the sensible thing which is debt reduction at a speed which is ignorant of what's happening in the real economy, and it's like trying to sit on a chair and lift it off the ground at the same time. But having said that, I think this is likely to be an echo rather than a repeat of what we had in the autumn of last year, because there are some green shoots of recovery in the US economy, emerging economies are cutting interest rates rather than putting them up and Europe has more tools at its disposal to prevent complete disaster, whereas last autumn they were just learning to walk.

Mr Jack asked his guests if they thought a bailout would be needed for Spain. Both thought it could and noted that the basic problem seemed to be that after the latest ECB interventions, the market had lost confidence in ‘Europe’ again.

April 11 business update 8.45am: Steven Major of HSBC said that the markets were spooked about Spain because deficit targets had been missed, together with a lack of revenue and tardiness in cutting expenses. Simon jack asked if the real issue was – like for Britain – low growth. Mr Major agreed and noted that the finance minister had refused to rule out a rescue. He added:

Well, the comparisons with the UK can only go so far, we have our own currency and the UK has been able to use that flexibility which means our fiscal and monetary policy can be adjusted very quickly. In Spain, there's external constraint on fiscal policy, and there's no monetary policy control at all, it's all done by the ECB, and there's no currency. So Spain is really trapped. They recognised that they have problems and the only thing that Spain itself can do is cut its spending. This needs to be done at the regional government level, not just, not just the central government. Mr Jack asked whether part of the problem was that regional bodies had ‘enormous amounts of power’. Mr Major said that debt levels varied significantly between regions.

April 12 7.34am: A report from Madrid about the latest problems in the Spanish economy. There were vox pops about the lack of jobs and the need for reform of public services. Two economists agreed that there was a need for austerity and it would be very tight. One said the Europeans were lacking a growth strategy to help countries like Spain. Evan Davis suggested that the ECB policy of lending to banks to allow them to buy bonds was not having the same effect as it had done. One of the economists agreed that this was the case but said it bought time and meant that a bailout would probably not be necessary.

April 12 7.51am: Justin Webb suggested that people were using tax relief on charitable giving to donate to some European charities in an improper way. Alex Henderson, of PwC said there were calls for a common ground across Europe. It was noted that the rules had been changed to allow giving within the EU.

April 13 6.10am: Rachel Harvey said that it was likely that David Cameron, during a visit to Burma, would be slightly less hawkish to his approach to EU sanctions than he had been in the past.

April 13 6.49am: (Extract) The Foreign Office is being forced to reduce its ability to promote British interests abroad. Interview with Richard Ottaway chairman of the Commons Foreign Affairs Select Committee.

JUSTIN WEBB: And yet when you look at our role in the world, and the way in which we are intermeshed now with other organisations, and obviously the European Union – in fact, today’s a very good example, isn’t it, because David Cameron’s going to be in Burma, he’s talking about sanctions, thinking about sanctions, it’s not actually our decision, is it, it’s an EU decision, and we sort of feed into that. I just wonder whether possibly our view of our self and our rather grand embassies that we still have in capital cities around the world is perhaps just out of line with the times, and what this government has done is recognise that?

Mr Ottaway talked about William Hague, making it clear that he intends to promote Britain’s interests overseas, and the number of overseas hotspots is not shrinking but growing. He refers to Britain’s permanent seat on the UN Security Council and being a leading player in NATO, but nothing further on the EU.

April 14 bulletins: It was noted that a row had broken out between Austria and Slovenia over whether a particular sausage could be granted Protected Geographical Indication Status by the EU.

April 14 7.33am: Justin Webb asked Tim Montgomerie of Conservative Home whether the government had lost its ability to speak directly to the Conservative right and backbenchers about issues such as euroscepticism. Mr Montogmerie’s reply made no mention of euroscepticism.

April 14 8.36am: Stephen Bell said the ECB had temporarily ‘cured’ the euro crisis as a result of its massive ‘free money’ plan – unlimited supply at low interest rates – but Spain was now falling apart with ever- worsening budget figures. Justin Webb then asked Lord Lamont if Spain was ‘something new and interesting’. Lord Lamont replied that the country was now in critical trouble – three year financing had bought time but meanwhile an incestuous relationship between banks and the government had been cemented. If interest rates rose above 7% the position could be unsustainable and that more austerity was vital Evan Davis asked what the solution was. Lord Lamont said the problem was that the plight of the banks was being made worse by them buying government bonds.

April 14 8.54am: Former foreign office minister Lord Malloch Brown, discussing David Cameron’s visit to Burma, said that Britain’s former unilateral relationship with Burma had been forgotten within the broader subsequent links with the EU.

April 16 business news 6.15am: Simon Jack said that Virgin Atlantic had decided to appeal against the European Commission decision to allow British Airways to buy BMI. Ewan Sterling of Standard Life said it was unusual to hear the view that the European Commission was siding with large corporates on competition issues, so he thought their chances were slim.

April 17 business news 6.15am: Simon Jack said that Switzerland was introducing tough new financial regulation. A lawyer explained the government had decided to comply with AIFM, the European directive requiring that fund managers should be managed. This laid down that in order to trade with the EU, they had to be supervised by the regulator. Simon Jack said:

Is this is a change of tactic also in Switzerland realising that it’s always had a very sophisticated financial services industry, but over the last few years, lots of different places in the world, the US, for example, the European Union, have gotten a little bit suspicious of them and said, look, you’ve got to come into line with everyone else, and actually they’ve been losing assets and losing credibility as a result of being, you know, putting themselves up against these kind of regulations, so they needed to change tactic to get some of the money coming back in?

The spokesman replied said it was a simply a question of the wish of the regulator to comply with international standards.

April 18 bulletins: Neil Sleat said that a new EU directive was coming into force websites to tell users that they were tracking browsing behaviour.

April 18 business news 6.15am: Simon Jack noted that the Argentinean government had expropriated shares in Spanish oil company Repsol. She said the EU’s foreign policy chief Catherine Ashton had the EU’s full support in opposing the move. She was quoted:

The government of Argentina must ensure compliance with its international commitments on the treatment and protection of investments originating from the European Union. The announcement was only made last night, but the European Commission and the External Action Service are studying the Argentinean draft measure so as to determine the next steps. All possible options are being analysed.

April 18, 7.17am: Sir Howard Davies, now an academic in Paris, said:

I think the French have been quite slow at reforming their labour markets, they are now suffering from high unemployment and there’s a lot on the competitiveness agenda, all of that, of course, within the context of the eurozone, because the French can do what they like domestically, but if the eurozone crumbles around them, they’re going to have a problem, so that’s going to be on the top of the agenda for the next president as well.

April 19 bulletins: It was said that the European parliament would vote on a bill to give details of airline passengers to the US authorities. Imogen Foulkes said:

The measures before the European Parliament would allow a long list of details about EU citizens including phone and credit card numbers, religious dietary preferences and medical conditions to be passed to the US Department of Homeland Security. It’s information the airlines already collect, but should they share it? Members of the European Parliament are divided. The vote in Strasbourg is expected to be close, but Washington has suggested that if Europe doesn’t back the proposals it may suspend visa-free travel, making a trip to the US rather more difficult for EU citizens.

April 20 bulletins: These said that the G20 countries were meeting to discuss boosting the IMF’s reserves by £250bn.

April 20 6.38am: Andrew Walker explained why the IMF was seeking a further £250bn – double their existing funds - to deal with countries in trouble including the eurozone. John Humphrys suggested this was chicken feed ‘if the worst happened in Europe’. Mr Walker agreed that £250m would not be enough to deal with defaults by Spain, Italy and France. He noted that George Osborne could hand over another £10bn without further Parliamentary authority, but:

He obviously does have a lot of reservations, not least in terms of the difficulty he get from the more Eurosceptic forces in the Conservative Party if he were to hand over money that’s obviously linked to the crisis in the eurozone. But at the same time, the government's position has been it’s in Britain's interests to have the crisis resolved in as peaceful manner as possible. One of the things he does want, I know, is to seek commitments from more countries. He doesn't want Britain to be too much on its own. Currently, the eurozone countries themselves have made some commitments, a few other countries on the continent and Japan. I think the Chancellor would like to see more safety in numbers if you like, if he were to put his head above the parapet, if I can mix my metaphors.

April 20 6.50am: An expat said it had been cheaper to live in France before the euro.

April 20 7.35am: John Humphrys asked Mark Reckless MP whether he approved of a further £10bn loan the IMF had requested because of the crisis in the eurozone. He replied:

Well, what I would like to see is the IMF stick by its original purpose which is to provide a balance of payments support for countries going through adjustments, intended to restore their competitiveness. The problem we have in Europe is that countries such as Spain and Portugal are hugely uncompetitive against Germany, and until the problem is dealt with either by Germany accepting significant inflation or by a devaluation to leave the euro which would restore competitiveness for those countries, then I don't think anything the IMF can do in providing temporary support is really going to help.

JH: Yes, but in the meantime, that analysis may or may not be entirely accurate, but if there is a crisis, if Italy starts to wobble seriously, Spain, heaven knows, France, then they've got to try, the IMF - along with others, not just the IMF - have to try to help to bail them out don’t they, because otherwise we all suffer?

MR: Well no, this is a European Central Bank’s job to maintain that currency together, and what would happen . . .

JH: (speaking over) They haven’t got the money, haven’t got enough money.

MR: Well, they can print as much money as it likes.

JH: It’s not allowed to.

MR: No, well we saw in December, when I say print money, what it says it's doing is lending money to the banking systems for three years, and then those banking systems then buy the debt of the relevant country, and what would be happening if there was a bailout involving the IMF is that official credit, including from our taxpayers in this country would replace the credit is currently being extended by the European Central Bank, and it’s the ECB whose job it is to hold the currency together.

JH: Alright.

MR: And unless it’s prepared to do that, then in the long term it’s difficult not to see how the euro can stay together.

Mr Humphrys then asked Ngaire Woods Professor of International Relations at Oxford University, what she thought. She said:

But there's two immediate threats to Britain, one is that the eurozone will either by accident or by insufficient action collapse will go into crisis, which would be disastrous to Britain; and the second is that crisis would have a huge impact, catastrophic impact on other economies in the world which will affect the rest of the British economy. Those two crises are what Britain has to work to avert. And traditionally, Britain has cultivated very carefully its relationship with the IMF and its influence within the institution, the IMF is the crucial backstop to Europe's own efforts and if Britain isn't going to be part of leading that cooperation in the IMF at this point, it's hard to see what Britain's strategy is… what we risk is every individual country saying, ‘we’re doing our own austerity, this is what Britain's doing, this is what the United States is doing,’ and thereby failing to contribute to a collective solution. And this is a collective problem, no individual country . . .

Mr Humphrys suggested that Mark Reckless’s point was that the inbuilt problem was a complete lack of competitiveness and that the euro did not work. Mr Woods said that it was vital for collapse to be averted.

JH: Isn’t that right, Mark Reckless?

MR: Well, I agree with some of what was said, and I think were the euro to collapse, were certain countries to leave the euro, then the IMF could well play a role in extending temporary official support to those countries while they rebuild their competitiveness. But what the IMF can't do is take over the role of European Central Bank, in propping up banking systems in peripheral countries that are uncompetitive with Germany. And I hope we don't do that, I . . .

JH:Alright . . . MR: I don't want to see our taxpayers’ money put at risk, and I’d like to see the situation dealt with, and the sooner we see countries leave the eurozone, the sooner we will see Europe back to growth.

JH: Alright, now impossible question Ngaire Woods, in one sentence really, is the euro going to collapse?

NW: Erm . . . ha, it’s . . . not immediately, not in the next six months, nobody can afford it to, so the ECB will use special measures, but we’ve got to watch this week, we’ve got to see a showdown in the IMF, Britain and Europe have to play their part in giving up their own privileges. And that’s the second strand of what Britain’s got to do . . .

April 20 8.51am: Gavin Hewitt said that if Francois Hollande won the presidential election, he would be a leader who believed the debt crisis could only be fought with more growth and not more austerity.

April 21 bulletins: Robin Brant said that the decision by George Osborne to loan a further £10bn to the IMF had been dubbed ‘bailout bull’ by Conservative eurosceptic MP Douglas Carswell. He said the criticism was echoed by others on the Conservative benches ‘who believe the UK is committing funds to a failing project, which of course it is not part of’. He noted that Mr Osborne did not need a Commons vote on the new funds because it was part of a package that had already gone through Parliament.

The criticism from some on his own side won’t surprise George Osborne. Nonetheless, Douglas Carswell’s blunt description of Britain’s latest contribution to the IMF as ‘bailout bull’ is hardly a show of confidence. And the criticism is echoed by others on the Conservative benches, who believe the UK is committing funds to a failing project, which of course it is not part of. Some also think it sends out an unpalatable message, that the UK is willing to take a multibillion pound risk on the euro at a time of sustained austerity at home. But the Chancellor, George Osborne, believes the current survival is crucial if Britain's economy is to have any chance of strong growth again. So, he's giving a further £10 billion loan as the IMF builds up its war chest to deal with any further problems. The Chancellor has avoided the need for a fresh vote in Parliament to approve the loan. He already had consent for the £40 billion total, but he's unlikely to offer any more - he knows that getting parliament to approve that could be a struggle.

April 21 7.14am: Tim Reed said that many Conservative backbenchers were opposed to the UK’s latest loan to the IMF. He said that Peter Bone had described the further loan as ‘bonkers’:

…another, Douglas Carswell, describing it as ‘IMF bull’ and saying the money is going in the same direction as the previous 30 million, £30 billion that Britain has handed over to the IMF, and that hasn't, they say, helped very much, helped the eurozone countries. Now, it's not just Conservative backbenchers who are against this additional money, Shadow Chancellor, Ed Balls, also saying that not only is George Osborne running scared of parliamentary scrutiny, because this won't have to go to a vote in the House of Commons, but saying that the eurozone countries themselves should have dug into their own pockets before Britain handed over any extra money to the IMF.

Mr Humphrys asked if some in the Conservative Party supported the loan. Mr Reed responded:

Well, clearly, there are some Conservatives who agree that it is necessary. One of them is the Chairman of the Treasury Select Committee, Andrew Tyrie, who said that the additional money is not only sensible but essential, though he does say that there should be strict conditions set and that the eurozone should put their house in order, in order for this money to be handed over. But clearly, there are disagreements over the ability of the eurozone countries to set their own house in order. The IMF has said that this money will not be directed specifically at the eurozone, but clearly, the Eurosceptics on the backbenches think that is where the money is going to go and it will be wasted.

JH: But there's nothing they can do about it?

TR: Well, George Osborne is going to avoid this, an additional vote, because this extra £10 billion is not putting Britain’s contribution over £40 billion, that £40 billion approved earlier by parliament, but he will be brought before the House of Commons, if not in an urgent question next week, for Treasury questions on Tuesday, and lots of questions, clearly, will be asked then.

April 21 8.30am: Sarah Montague, noting that George Osborne, Chancellor of the Exchequer, had pledged a further £10bn in loans to the IMF, asked him what he would say to those in his own party who opposed the loan. He replied:

Well, I'd say first of all, Britain has a massive interest in a stable world economy, and institutions like the IMF help ensure that stability. And if you don't have a stable world economy you lose jobs in Britain and the British economy suffers. And I say the second thing is this: thanks to the tough action the government is taken Britain can be part of the solution not part of the problem. We can actually be helping bring that stability to the world rather than undermining that stability. And frankly, if we hadn't taken the action that we have taken to deal with our debts in Britain then we'd be the people looking to bailouts. So I think, you know, what we've done in Britain enables us to help bring stability to the world.

SM: The place we’re bringing stability to is the eurozone, and that is undoubtedly what this money is going to be used for, to prop up the single currency, isn’t it?

GO: Well, not necessarily. I mean, the IMF wants to have the right resources to deal with whatever is thrown at it and thrown at the world. And the IMF is just the collective countries of the world coming together, and the action we've taken of the British people, the British government, to make a contribution to the IMF is something that's been matched by the Japanese people, the Korean people, the Australian people, people around the world, governments around the world understand that we do all face the problems of an unstable world economy. Yes, problems in the eurozone, but also problems from high oil prices, and other countries that have had problems with their debts, and if we stick together we’re much more likely to solve these problems.

SM: Are you relaxed about it being used to prop up euro?

GO: Well, we're very clear that our money comes with conditions. First of all, it's a loan, it's a loan that comes with interest and gets paid back, and no one has ever lost money lending money to the IMF. Second, we want full what's called IMF conditionality, in other words, if there were to be any future programs for countries that get into trouble, we want the IMF to go in there and make sure that they then do the right things to get their country back on track. And it would have to be money for countries, not for currencies, it's not a special fund for the euro, in fact, the IMF has 53 programmes around the world, of which only three are euro countries. But I'm not, I'm not pretending to you that of course the eurozone doesn't have its problems, but in the end, we've got to be, as Britain, people who believe in strong international institutions like the IMF, which, by the way, an institution which 60 years ago Britain conceived and Britain had the original idea of. SM: You don’t have to go back to Parliament to get approval for this money, you’ve got approval already for £40 billion, you’ve given £30 billion and this is the balance of ten, but there are those on your backbenches who think that that agreement was too long ago, and this is not within the Parliamentary spirit and you should be going back to them?

GO: First of all, I've always kept Parliament fully informed about what I've been doing, and explained that the Prime Minister David Cameron has explained to Parliament what our intentions are, and this shouldn't come as a surprise that we’re making this loan to the IMF because we've been talking about it for almost a year now. And second, actually, when you look at Tory backbench opinion, yes, of course, some people have been critical, and they've been critical all along, but actually, quite a lot of Conservative backbenchers have come out and said this is the necessary and right thing, and I think it's important to note that the Conservative head of the Treasury Select Committee, who often criticises the government when he thinks they're getting it wrong, says this contribution to the IMF is essential, so I think there's a broad body of Conservative opinion that understands we're doing the right thing. And although the Labour frontbench have been very opportunistic about this, and these are people who in the past did support the IMF and now, for the sake of party politics are not supporting the IMF, actually, quite a lot of the senior Labour politicians who've been in government and understand that Britain needs a stable world economy, I think we'll be rather dismayed by the Labour position.

SM: If Britain is asked for more, would you give more?

GO: Well, I've always been prepared to listen to any argument put was about what the IMF and other international institutions need, and if I felt that there needed to be more than I'd be very happy to go to Parliament, to go to the British people and explain that. But I have to say, I think that now very unlikely, we've made our contribution, it is going to be contribution which I think ensure that for many years to come the IMF is well resourced and can deal with whatever is thrown at it

April 23 business news 6.15am: Simon Jack said in passing that Christine Lagarde of the IMF had ‘passed the tin’ round eurozone leaders and had got in €430bn. Mr Jack also spoke to business school academic Tomasz Michalski about the French elections. He said:

…there is a crucial difference, that Sarkozy, if you like, that he would support a fiscal compact that he negotiated with a number of European leaders and he's going to write the golden rule that is stipulated by the fact into the French constitution. Now, Hollande wants to negotiate the whole . . .

SJ: (speaking over) This is the golden rule, let’s make clear, it’s the 3% . . .

TM: Yes.

SJ:. . . limit on the deficit in any one year.

TM: Oh, exactly, yes, yes. Sorry for (word unclear). So, basically Hollande wants to renegotiate that, so that there is a crucial difference between this is and it’s going to be unclear how he wants to do that for the first.

Mr Jack asked if the win threatened the strong France-Germany alliance in the euro. Mr Michalski doubted it would – ‘you deal in politics with whom you have to’.

April 23 6.34am: Ben Wright said there was a lot of opposition from Conservative backbenchers to proposed changes in the House of Lords. They believed that a higher priority should be a referendum on EU membership. This could be a real headache for David Cameron.

April 23 6.37am: Katya Adler said there were ‘huge questions about why large numbers had voted for the National Front, the ‘anti-immigration, anti-Europe’ party. She said Nicolas Sarkozy needed their vote if he was to win. She opined:

It won’t be hard for him to sound the anti-immigration tone, he’s done that before, but for the man who’s been at the forefront alongside Germany of trying to manage the euro crisis, it’ll be difficult to pander to a party that’s isolationist, protectionalist (sic) and wants to leave the euro altogether.

Referring to Francois Hollande, she later said:

If there is a Socialist president, what does this mean for managing the euro crisis? He’s a tax and spend man, Mr Hollande, how will that go down with Germany and the rest of the eurozone, and how will a left wing president in France get on with a Conservative prime minister in the UK – so everyone is watching.

April 23 6.52am: Noting that criminal proceedings had commenced in Greece against austerity as a ‘crime against humanity’, Mark Lowen spoke to some of the protestors, who were ‘ordinary Greeks’. They said their evidence was that the government had taken away their money and their access to a variety of public services, as well as removing their right to have children and family life. A constitutional lawyer said there was no case for the action. Mark Lowen said:

But still the emotions grow stronger as the anti-austerity demonstrations continued. The cuts will be at the forefront of people’s minds as they vote in the upcoming election.

A spokesman for the Pasok party said:

These two ladies just see the outcome of something that they think is the result of the austerity rather than the result of a very badly-managed economy for decades. Yet, the Greeks were also voting for those same political parties that these two ladies are complaining against.

ML: But the group behind the case is confident that this rare example of citizens taking the government to the ICC will make progress. The court says it will now consider the evidence. Whatever the outcome, it shows clearly just how far Greeks’ trust in their own government has fallen, how devastated they are by what has happened to their country and how those emotions are likely to be vented at the ballot box on May 6.

April 23 7.13am: Chris Morris said that Francois Hollande would ‘change the emphasis’ in the approach to the EU.

April 23 7.51am: A French Socialist MP said that Francois Hollande was proposed ‘another way’ out of the EU crisis. A Sarkozy supporter said that France could not define another way for Europe on its own.

April 23 8.10am: Nick Robinson suggested that David Cameron (who had just been interviewed) would hold a referendum on Europe only if he had to (like Wilson) - and had indicated he ‘maybe might’.

April 23 8.38am: Noting that the French National Front had won a record 18% in the first round of the presidential election, Gavin Hewitt noted they wished to ‘ditch the euro’. A spokesman said Mr Hollande’s policies towards the EU were no different to those of Nicolas Sarkozy.

April 24 bulletins: These said the Dutch prime minister – who had resigned after being challenged by Geert Wilders’ Freedom Party over austerity measures – would try cutting the budget deficit by €16bn.

April 24 business news 6.15am: Colin McClean of SVM Asset management said that three years into the euro crisis, populations were not going to vote for austerity:

But it may be that we need to write down more of the bad debts at the end of the day, that trying to keep these debts alive and trying to keep this austerity going is just the wrong solution.

April 24 Yesterday in Parliament:

SEAN CURRAN: The Conservatives began fighting back yesterday. It’s early days, but it looks as though some of them have decided to start with their own side.

PETER BONE: Does not the Chancellor agree that it is bonkers of a policy to pour billions of billions of UK tax payers’ money into supporting the failed euro?

SC: That’s Peter Bone, he’s unhappy with George Osborne’s decision to commit another £10 billion to the International Monetary Fund. The Chancellor insisted the UK had always supported the IMF and it was in our interests to make sure that the world economy was strong.

GEORGE OSBORNE: We will not turn our back on the IMF or turn our back on the world. (cheers) That would be a betrayal of our country’s interests and our country’s identity and it would incidentally at the same time be a betrayal of my party’s history.

April 24 6.35am: Anna Holligan said that the prime minister of the Netherlands had resigned in a crisis over austerity cuts and had then obtained cross-party support for a series of measures that would cut €16bn from the budget and set an election date. Evan Davis asked who would stop ‘’em’ from introducing their own rate of debt to GDP rather than the 3% demanded by the EU. Ms Holligan (laughing) said everyone in Europe appeared to have faith in the Dutch, but this was hard territory for them because up until now it had been assumed they were complying with austerity. She added:

And I think it's quite surprising, and a lot of the southern economies especially will be quite astonished by what is happening here in the Netherlands. But sometime I think there have been problems bubbling underneath the surface that haven't been visible elsewhere. House prices here at fallen by about 28% in the last few months and earlier this week there was a food bank, and has been a 10% rise of people in the Netherlands have been going to get these crates of food handouts, which I think the surprise a lot of people because, from the outside, the Netherlands appears to be quite good shape.

April 24 7.13am: Steven Major of HSBC reacted to the news from the Netherlands. He said the country had been at the core of the euro project for many years and therefore their fall of government was making the markets nervous. In addition, recent polls were pointing to a hung French presidential election, and that was also causing uncertainty. Evan Davis said:

The chief economist at the IMF Olivier Blanchard said he thought that the markets were, he used the phrase I think, schizophrenic in the last week or so. He was saying on the one hand they’re keen to sort of demand austerity, and then on the other hand they hate it when the austerity leads to lower growth as it so predictably does. I mean, what you think the view of the markets is at the moment, maybe you just have to scrub out lots of debts, it's not going to work if you cut the deficit if you don't get the growth, and it's not going to work if you don't cut the deficit. You've got . . . Basically, it just doesn't work, does it?

SM: Well you’re right, for the eurozone it’s further complicated by the fact that there isn't flexibility on policy, and in the absence of austerity is difficult to see what the government can do because, they don't have autonomy over their monetary policy. And so, credible fiscal policy is the only way forward. And markets are really waiting to see whether there’ll be a fiscal union and common issuance, and if there isn't sometime soon and there will be more pressure on the eurozone.

April 24 8.20am: Evan Davis said:

Now, if you wanted to design an economic system to promote nationalism in the eurozone, I wonder if you could possibly come up with anything better than the one they have? With a shrinking economy, struggling debtor countries confronted by policies demanded by more powerful nations, and above all austerity across the continent. France and the Netherlands have both seen the influence of right-wing parties in recent days, the first-round election results in France, and of course, the fall of the government in the Netherlands. What does it all mean for the euro? Let's discuss the Netherlands, Geert Tomlow is on the line, once a member of the right-wing PPV Party, led by Geert Wilders, which has rejected austerity and broader government and brought the government down. Good morning to you.

GEERT TOMLOW: Good morning.

ED: What does the right in the Netherlands want to happen, not just in the Netherlands but outside the Netherlands, because my understanding is you've been lecturing the southern nations quite a bit on the need for austerity, but now don't seem to want to impose it on yourself?

GT: Well, we would like to impose it on ourselves, but it's rather difficult at the moment with the crisis going on, so actually, I'd say Holland did fall on its own trap, I mean, we were the best pupil on the block and then at the moment we are struggling to meet the 3% budget. So it's a bit of a difficult situation at the moment, but don't let your question, what does the right want - actually, the right wants to give the voters the feeling that the money which is in this country, which we still are a rich country, that is also spent on the Dutch people. And at the moment, with Europe and with all the, all the economical er, broadcast, I mean, er, outside spender (?) the Dutch voters have the impression that there's more money going out of Holland to other places and to the Dutch people themselves, and that's the difficulty.

ED: And what would you like to happen then? Would you like the euro to . . . you’d like Greece, possibly Spain, Italy, Portugal, all to leave the euro? I mean, because that's going to be highly disruptive and not altogether easy for the next few years the countries like the Netherlands and Germany. GT: I agree with you completely, but there is somewhere, there is a border, at one point the voters will say, lovely, we have respect for your problems in the Mediterranean area, but there will come a point where perhaps the northern European states will say, well, we'll get together, we'll form a special unit within the European Community.

ED: So basically, you have a kind of two-tier eurozone, with the northern and southern separated.

GT: (speaking over) Perhaps a treaty, perhaps a treaty. I mean, what can one do? I mean, we know that we are in a crisis in Holland, we know we spend a lot of money on Greece or in the future on Italy or Spain or whatever, and in the end people say in this country, what's happening to us, who’s helping us?

ED: Just in terms of the politics of the Netherlands now, where does the right go from here, when elections are held, possibly as soon as June, maybe in the autumn, is the right going to do well?

GT: That is the interesting question of course, Wilders he was very successful in 2010, he got entrance into the government, and he had a chance on power and he, he well, you missed it, and last Saturday he thrown in a bomb (?) so, basically the point is where will the voters stand? At the moment we saw the last six, seven years that voters were going more for the extreme, as well as right and left, but I think at this moment everybody’s getting really scared. And I think the political centre will have a good chance for the next government.

ED: Alright, well Geert Tomlow, thank you very much for talking to us. I should say you were once a member of the PPV, and I know that you had your own disputes with the party and were expelled for criticising the party constitution.

GT: That’s absolutely right

ED: Let’s talk to Alistair Darling, the former Chancellor who’s more experience and knowledge of the eurozone crisis than most people, good morning to you.

ALISTAIR DARLING: Good morning.

ED: Let’s just start on nationalism. Did you agree with the contention I made in the introduction to this that maybe this whole system is almost one that looks as though it could almost have been designed to promote nationalism in the way that is constructed at the moment?

AD: Well, there’s always that risk and particularly, there are some countries like the Netherlands for example where there is a history of far right parties, but it's not just there. I mean, this goes back to the argument that's been running, you know, ever since the crisis blew up, and that is just how far and fast do you get your borrowing down, and how do you do it in a way that doesn't damage your economy or cause social unrest? And you know, I think that is what you're beginning to see in parts of Europe. But I think the critical thing is gone wrong here is the eurozone has signed up to this daft treaty that requires them to impose austerity which is killing off growth, and without growth of course you never will get your borrowing down. Spain is now back in recession, they can't meet this target of 3% borrowing in relation to GDP, the Dutch who actually are one of the stronger economies, it looks like they're not going to be able to do it, France it looks, as if, if there's a change of government they'll want to renegotiate the whole thing. Surely the time has come now for the eurozone to recognise the policies they are pursuing at the moment will not work, no one believes it. Heavens, you've even got the IMF at the weekend building up a war chest, because it knows it's probably don't have to bail the thing out.

ED: But you’re, you might be understating the problem, you see, you’re saying that problem is austerity is leading to a decline in growth which make us . . . makes it difficult to get the deficit down, but not having austerity may make the deficit difficult to get down in some of these countries. It might simply be that the current set of obligations, debt obligations and deficit obligations, spending obligations that countries have simply not able to be serviced or committed, and ultimately, just a lot of debt might have to be written off in a lot of countries, and we're not there and we're not talking about it yet.

AD: Which is what, what, what has happened in Greece. Remember, two years ago people said Greece wouldn't have to write off its debt and that's precisely what has happened. I mean, we've got to get borrowing down, I mean, that's absolutely essential, the only argument is the rate at which you do it. Now, Spain is an interesting example because, you know, the Spanish government is signed up to austerity, if you like, it's clearly having difficulties, markets are beginning to doubt it, it's now gone back into recession. And of course, it isn't just the fact that you can't repay your borrowing, austerity means higher unemployment and that's where you get the social and therefore political stresses coming in. I think what's necessary in Europe is actually, you know, given that there is a system of governance there, they do need to sit and come up with a credible plan, because there does need to be a credible plan, and I'm not talking about letting people off, if you like, but unless you have a plan that looks like it will stick and it will work and actually deliver the policies that will get borrowing down, and, you know, at the same time get growth, people back to work, then I think you’re going to see another euro crisis.

ED: And . . .

AD: All that happened in the last few months is the European Central Bank flooded the system with money, they've bought time but they're not using that time to get a proper and credible plan. You know, you've seen similar sorts of things in this country, where growth has almost been killed off, we really need to get growth going, otherwise we'll have economic problems and will have social problems.

ED: And in the meantime who is going to lend all the money to those governments, if the markets say look, we just don't know if this is going to work, this new, Alistair Darling, slower austerity plan, if that isn't going to work, who is going to be lending money to those governments, because they'll need to be borrowing a huge amount in the meantime, it's got to be the ECB, which the ECB is not very keen on doing?

AD: Well, the ECB has been effectively lending money into the system, we come back to the same old problem: if you have a single currency that has implications, it means that the richer parts have to help the poorer parts make the adaptions they need to help them become more competitive, and that is what a single currency means. If you've got a single currency then you've got, it has fiscal, it has economic consequences and political consequences, and you know, all countries within the European Union, within the eurozone have to recognise that. And of course, it's in Britain's interests that they recognise that because we trade and so much on this, and indeed, if you look at the sheer size of the eurozone it is critical to the world prospects for growth, so this is unjust, it isn't just a parochial matter if you like.

ED: Indeed.

AD: But, you know, I really think that we cannot simply go on putting the whole thing off, hoping something will turn up, it’s becoming abundantly obvious that fewer and fewer people believe that.

.

April 25 bulletins: These said – at 7am only and in two sentences - the European Commission was expected to propose a 6.8% rise in its budget. The item noted that the previous year, a suggested 5% increase was held to 2%.

April 25 6.38am: Nigel Cassidy said the European Commission had decided to ask 6.8% more for the EU budget, taking the figure to €138bn, and said the relevant EU commissioner had likened it to a ‘nasty credit card bill’. He added:

The EU has entered into all kinds of legal obligations to pay for things, whether its research and development projects, projects that have overrun in their costs, and they’ve basically got to pay for them. But of course, they will inevitably be accused of double standards - on the one hand, they've been telling EU states to pull in their homes for the last couple of years, and now here they are, apparently, spending 6% more. So they’ve got to stage manage it to try and show that they need the money and, Britain of course will, among other countries be very unhappy.

He said there had been similar objections about the 2012 budget, and the increase then had been reduced from 5% to 2% - such arguments had been going on for years and were ‘old vintage stuff’. Justin Webb asked which spending they wanted reduced. Mr Cassidy replied that what was being targeted were regional development funds. He said:

…this is a real problem because all the time now, everybody’s starting to talk about how on earth can Europe get growth growing, and essentially the only way it can do that is by spending cash from the richer countries. We’re hearing this phrase ‘austerity backlash’ – countries feel the institutions need to act, you know, as they’ve done in the past to try and save Europe, but they need money for that, and this is the very money that countries like Britain don’t want to spend.

April 25 7.13am:

EVAN DAVIS: It’s time for the arguing start over the EU budget for next year. The Commission is making a pitch for it to rise by, wait for it, 6.8%. It is a time of austerity after all. Well Reuters has seen minutes of the meeting of senior Commission officials which says, some cabinets (unsure of spelling, pronounced in French way) were worried that the proposed increase of 6.8% would risk being wrongly interpreted. Richard Corbett is an advisor to the EU president, Herman Von Rompuy, former MEP, he joins us from Brussels, good morning.

RICHARD CORBETT: Good morning.

ED: I would say the risk of 6.8% being wrongly interpreted (laughter in voice) is a very big risk. Or would it be rightly interpreted? It does seem like an awfully large number?

RC: Yes, but the Commission proposes, it’s the member states meeting in the Council and the European Parliament that decide and the Commission’s proposal is just the starting point for that process.

ED: But does not the Commission perhaps lose a bit of credibility if it proposes a number like 6.8% for a budget increase at a time when Spain's government, Spain is struggling to impose austerity in itself, the Dutch government has fallen, the French are in austerity backlash mode. I mean, a lot of people are just going to say, 'what planet are they on?’ Aren't they?

RC: Well, absolutely. I think a lot of the member states and members of the European Parliament will say that. To be fair to the Commission, I think they will argue that what they are proposing reflects past decisions taken by ministers on the different countries, decision to finance this or to, or to . . .

ED: Ah. RC:. . support that, that are now coming up to the payments time. Because remember the EU budget operates on a seven year cycle, there’s an agreed seven year framework, and a lot of things fall due at the end of that cycle, and we’re coming to a year that is at the end of that cycle. So I think the Commission will justify its proposal by saying, ‘Well, we’re cutting back as much as we can, but these are existing commitments that you member states, you national governments, entered into which now need to be financed.’ On the other hand, I think the governments will look at that very carefully, and say well hang on a minute, can’t we cut back here, do we need to do this now, erm, and look at it meticulously.

ED: Ah, but if that interpretation is right, this in a sense is not a budget that we’re setting now, the decisions have all been taken, it’s just a matter of affecting those decisions. The real struggle be over what the next seven year period, or is it 2014 . . . ?

RC: Yes.

ED:. . . will be the first year of that.

RC: There’s a seven year period and those are the really interesting negotiations, they’re underway now, and there I think what needs to be done is we all need to look at what are those subjects where spending at European level can save us money at national level by avoiding duplication, or by economies of scale. Research, expensive research programmes for instance, if we pool our resources together we can all save money nationally, and those are the sort of things that we should be spending money on at European level.

ED: Ah, that just sounds like another bid for taking more stuff away from governments and putting it into the European Union.

RC: Well, except it will be the governments themselves that decide that, so I don’t think they would do that unless they are convinced of the case that it is useful to do so.

ED: Do you think 6.8 is going to happen? I mean, or will they try and find savings elsewhere on the bits that they have some discretion over?

RC: Well, the usual pattern is the Commission’s initial bid is pared down, you mentioned it about last year it was well less than half of what the Commission proposed so, it is a starting point and let’s after all have a sense of proportion on all this. 2% of our public spending is at European level, 98% is at national level, the EU budget in that sense is relatively, is relatively small.

ED:(speaking over) you could use that excuse, you could use that excuse, you could use that excuse for all the other 2%s as well, and it wouldn’t (words unclear due to speaking over)RC:(speaking over) No, no, no doubt you could . . .

ED: Richard Corbett . . . .

RC. . . but you’ve got to look at where we could save money by acting jointly at European level.

April 25 8.54am: Dr Gerard Lyons of Standard Chartered Bank said it was very difficult for the UK to avoid slipping back into recession because of the eurozone problems. He said the challenge for Britain was to try and avoid the recessionary forces, and at the same time, the domestic economy was fragile. Erik Britton of Fathom Financial Consulting said the eurozone countries appeared to have a death wish and the government in the UK was going to scrimp on demand.

April 26 6.52am:

SARAH MONTAGUE: British people are becoming increasingly Eurosceptic so you would have thought that that might benefit one-party that's made it clear that it wants to pull out of the EU – UKIP - so how will it fare incoming local elections? The party leader, Nigel Farage is here with us in the studio, good morning to you.

NIGEL FARAGE: Good morning.

SM: Now then. No MPs, only 31 councillors, so what would be the point of someone voting UKIP?

NF: Oh, what was the point of founding the party in the first place? You know, you have to build, and we've built the party through PR elections, namely the European elections to a point where in the last ones in 2009 we came second across the entire UK. We, in the early years, were about who governs Britain, trying to wake people up and say, look, we've given away our sovereignty, we must claim it back. What we’re now about is how Britain is to be governed once we got that independence back, and that's why you've seen a broadening of our manifesto, it's why we're campaigning on education, it's why we're campaigning on health, things that are relevant people in their everyday lives, so what we now have to do is to build a base in local government.

SM: Okay, but I wonder, that's understandable from your point of view, but somebody who's going in and putting across on a ballot paper, it's really all about sending a message, isn't it?

NF: It’s about more than that, I mean, look, you know, we only control one town council in the country, up in Ramsey last year, but we've shown there that we can do things officially, we can operate well, we're not career politicians, we’re people from a broad range of backgrounds, with some real practical experience and we're now in the business of forming a real political party not just a protest movement.

SM: And a real political party that would, if you were in government, you would immediately pull out of the EU.

NF: Well yes, we want to have a free trade deal with Europe, we want to cooperate with Europe, trade with Europe but not be governed by Mr Barroso and Mr Von Rompuy.

SM: Okay, and when you follow through what that would mean in terms of . . . What would it mean for the future of the free movement of people?

NF: Well, it firstly means of course that we're better off by 50 million quid a day, which is our current membership fee. It means, in terms of British business, that nothing changes at all, because just as the Swiss and Norwegians trade with the EU without being members of it, so would we. And it means, in terms of the free movement of people, we would be able to stop the total, uncontrolled flow of migrant labour from Eastern Europe which is doing is so much harm, at a time when youth unemployment in Britain is 21%.

SM: Stop the flow of labour, so basically . . .

NF: (speaking over) No, no, no, no, no, no. Stop the unrestricted, open door flow of labour. That is the problem here, never in our history . . .

SM: (interrupting) How, how? I just want to . . . could you unpack how that would work?

NF: Never in the history of this country have we said to a group of countries, ‘as many of you that want to come can come, it is totally unrestricted, and oh, by the way, if you can't find work . . . SM: (interrupting) I’m just a bit, okay, what I’m wanting to . . .

NF: . . . you can always claim Social Security.

SM: Okay, but what I can't, what I'm trying to understand is how this free trade, you're talking about you want a . . .

NF: Ah . . .

SM: . . . free trade agreement, but you put the, basically, the walls and to anyone who is coming in and working here.

NF: We are a great free trading party, and we believe that the EU is inhibiting our ability to trade freely with other parts of the world. The free movement of capital and the free movement of goods is a completely separate argument to the free movement of people. Never before, when we've struck free-trade deals have we ever said . . .

SM: Okay.

NF: . . . that also includes free movement of labour, and if you look at the way it worked out, you know . . .

SM: So nobody in the UK could go and work elsewhere in Europe, and . . .

NF: No, no, no, no, listen . . .

SM: And nobody in Europe could come and work here, but we would trade with Europe?

NF: Nobody is arguing that at all, and we have worked all over the world, and other people have worked here, and we’ve been doing that for centuries, that is not a problem, what we’ve never done before is to say to people in poor countries, as many of you who want to come can. And that has done enormous damage.

SM: How are you stopping that though, I’m still not clear, you’re making, your making this point, and I’m trying to follow . . .

NF: (speaking over) When, look, when you get your independence back . . .

SM: . . . through how it would work.

NF: When you get your independence back, not only can you make your own laws, but you can also control your own borders. And as a member of the EU, we cannot control our own borders.

SM: But how are you stopping people coming to work here?

NF: Well, you stop it by saying, ‘no longer is there an unrestricted free-flow of migrant labour allowed to come from Poland’, number one. And number two you say, ‘We will not give people Social Security benefits until they’ve been in Britain, paid taxes and obeyed the law for five years.

April 27 7.32am: Deanne Julius, formerly of the Bank of England Monetary Policy Committee, noting the UK’s entry into a double dip depression, said that Britain had spent its way into crisis with a budget deficit in 2009 of 11% of GDP – and was in the same category of hole as Spain and Portugal - but thankfully was not also burdened by being in the euro. Vicky Pryce, economist, agreed, and said Britain had flexibility in its monetary policy.

April 27 bulletins: These noted that Spain’s credit rating had been cut amidst calls for stronger action from the EU to tackle the problems.

April 27 business news 6.15am: Simon Jack noted that Spain’s credit rating had been reduced from A to triple B plus because of concerns over the weakness of Spanish banks. He added that Ernst Weteke had been on the ECB when euro notes and coins had first been issued and disputed whether Greece should ever have been allowed to join the euro. Mr Welteke maintained that the euro was stable but that the problem was the southern European debt crisis, which had occurred after 2008. He said the financial sector had profit-taken from the crises and this needed spelling out to the public. .

April 27 6.12am: Justin Webb noted that a report from the House of Commons international development committee had said that most EU overseas aid did not go to the world’s poorest people. David Loyn said that about a sixth of UK overseas aid was distributed via the EU, and 60% of the world’s overseas aid came from Europe. One billion pounds of UK aid was distributed via the EU. He added:

It’s not surprise, I suppose, that most of . . . that much of that money, it’s administratively very expensive, this committee is critical of the way that that money, is, some of it, goes on European bureaucracy, rather than straight to the poorest people.

JW: So they don’t spend it as efficiently as we do, that’s the point, isn’t it?

DL: They don’t, it’s twice as expensive administrative costs in Europe, and some of that is justified by the fact that they spend it in different kinds of ways, but Britain has been very critical of this, the government’s been very critical. The big surprise I think in all this is that two of the biggest recipients of EU aid are Turkey and Serbia, which I think might surprise some people, who are pre-accession countries.

JW: Let’s focus on Turkey for a second, Turkey is a relatively wealthy country, isn’t it?

DL: Yes, it’s a member of NATO, you know, very large armed forces, I went through Istanbul airport the other day, it’s one of the most developed places I’ve been through.

JW: So what’s the money being spent on?

DL: The money’s being spent on improving the Turkish economy, particularly Turkish capacity, Turkish capacity in terms of its government capacity, in order for it to join the European Union. And I have to say, there is no incentive to change this in the British government, there’s no incentive to change the way that they define aid. The committee are very keen, Malcolm Bruce, the head of the committee says that these figures are being fudged, that this is a way of moving aid to countries that are strategically useful for us, but it’s not actually international aid, but Andrew Mitchell says, no, this is very much in our strategic national interest. And the other reason why there’s no incentive to change the way that we define aid is that we are very close in this country to this long commitment, this thirty year commitment to get to 0.7% of GDP being spent on aid. And if you suddenly redefine the way that you’re spending it, then the target moves further away. JW: The point is though, it’s not development aid, is it? I mean, it’s that word ‘development’ that is the false one.

DL: Well, it’s a question of how you define it, Justin. Internationally that’s (words unclear due to speaking over)

JW:(speaking over) That’s political development aid.

DL: Giving money to Serbia in order for it to improve its economy so that ultimately it can join the European Union, giving money to Turkey, are strategic interests for Europe, and they are defined as international development aid.

April 27 7.16am: Rachel Harvey reported that the EU foreign policy chief Lady Ashton was in Burma to deliver a message that the EU supported reform, but was worried about the human rights record. .

April 27 business update 8.47am: Louis Cooper of BCG partners noted that the ECB was having internal rows about how to reform the eurozone, but the German Bundesbank ‘hard position’ was that it was up to countries – not the ECB – to do the ‘lifting’. He noted that a third of the eurozone’s unemployed lived in Spain and that underlined the amount of reform that was needed, yet the government was seemingly not carrying through its commitments to do so. .

April 28 bulletins: These said that the EU’s foreign policy chief Lady Ashton was visiting Burma.

April 28 7.27am: It was noted that a parliamentary committee had said that too much EU aid - £182m in 2010 – was going to Turkey. Justin Webb said:

They were complaining about it being spent and suggesting that Turkey wasn’t a proper recipient – it’s quite interesting to hear there evidence of the kind of boom that there is in Turkey, not necessarily that the two things are related or unrelated. But there you go. Anyway.

April 30 bulletins: These said that Australian-owned Yorkshire and Clydesale banks were cutting 1400 jobs and blamed the move on worsening economic conditions in the UK. This was 17% of the workforce.

April 30 business news 6.15am: Tanya Beckett, noting that eurozone countries had to submit that day their deficit targets to the European Commission, said the Spanish deficit was 8.5% and the economy back in recession. Pedro Schwartz, an academic economist denied the country would need a bailout, He said that outside help, however, might be needed by banks because they were showing bad loan figures. Ms Beckett said there appeared to be a groundswell that austerity had ‘gone far enough’. Mr Schwartz disagreed and said the prime minister had confirmed that he was sticking to the reform policy, the plan was to cut public expenditure and increase VAT. .

April 30 6.39am: Chris Morris said that eurozone countries had to hand in their budgets to the European Commission that day as part of new efforts to restore confidence in the euro. They had to show that their deficit would be less than 3% of GDP by 2013. He noted that austerity was beginning to bite hard – the ratio had gone down from 6.2% in 2010 to 4.1% in 2011. Some countries were finding it hard to reach the 2013 target, Spain for example, and ‘many people’ thought it counter-productive to force matters. John Humphrys asked how people were likely to react to David Cameron’s statement that it was nowhere near the half-way stage in the euro crisis. He replied:

I think a lot of them will agree with him. Obviously, there has to be public expressions of confidence that, you know, we’ve turned a corner, but I think a lot of people know that the fundamentals haven't changed, that there's been a pause after the European Central Bank flooded the banking market with what was essentially free money, and that causes pretty much coming to an end pretty quickly. And what's happening now of course is that while we have all these targets, these kind of bureaucratic initiatives in some ways, the emphasis on cutting deficits through austerity is beginning to run up against political opposition which we may well see in a week’s time in both Paris and Athens, presidential elections in France next Sunday, parliamentary elections in Greece. And in both countries candidates who are opposed to the German-inspired emphasis on austerity above all else, are expected to do well. And so I think the challenge is going to be, if there is a new political dispensation, if there is François Hollande, the presidential challenger in France, the Socialist challenger, does become president, how do you promote growth without increasing your debts and deficits again? I think that's where the balance of the discussion is going to shift to.

April 30 business news update 7.18am: Tanya Beckett, noting that Yorkshire and Clydesdale Bank was cutting 1,400 jobs, said many were wondering if austerity had gone too far. Robert Peston said that the recovery in the UK was proving very difficult but this news was not an indicator if policies were right or wrong.

May 1 business news 6.15am: Simon Jack, noting how Ireland had been a ‘model patient’ since its bailout, said the government was planning to return to the bond markets to borrow money later in the year. Michael O’Sullivan, author of a book about the bailout, said he no longer believed austerity was working because unemployment was very high and social problems were rising. Simon Jack said that it was nevertheless meeting payment deadlines and avoiding ‘the death spiral’ affecting Greece. Mr O’Sullivan said that was because Ireland had better exports and more skills. He said that a referendum about the new fiscal treaty was likely to be passed on May 31.

…I think the broad view on the street is that people feel there’s a lot of fear, and they would rather I think be more aggressive, send a more aggressive or different message to Brussels, more growth, less austerity. I think also a focus on the underlying problems of the eurozone construct, and the fact that it’s an adolescent structure and needs to be remade. And also I think people would push back against the fact that Ireland is seen to digest austerity and seen to do it gladly.

It was also noted that sterling had reached its highest level against a basket of currencies since 2009, and there was comment that this was ‘understandable’ against the euro.

May 1 6.10am: Christian Fraser speculated that the election of a socialist French president would put the cat among the pigeons. Investors were looking at his tax plans and also his intention not to sign the EU agreement on budget discipline that had been agreed.

May 1 7.18am: A member of the Young Socialists in France said that jobs would be at the heart of economic policy and they would change the way the EU was doing business.

May 2 business news 6.15am: Stephen Saywell, of BNP Paribas, said the UK economy was still benefitting because sterling was still at a weak level against the euro, despite recent falls in the value of the latter.

May 2 8.42am: Chris Morris noted as the eurozone crisis had developed, governments in Italy, Spain, Greece, Portugal and Ireland had been kicked out of office. Mr Sarkozy would thus have to swim ‘against the electoral tide’.

May 3 bulletins: Gavin Hewitt said there had been a ‘long and scrappy’ debate between the candidates in the French election.

May 3 business news 6.15am: Richard Dunbar, of Scottish Widows, said that the latest unemployment figures from Spain (24%) would ‘concentrate minds’ at a meeting of the ECB.

May 3 7.13am: Matthew Price analysed the prospects for the Greek election. There was actuality from a candidate who said the way forward was a growth agenda, not more cuts. Mr Price added that new anti- austerity parties were emerging and would split the vote ‘making the next government very weak’. This could mean that the bailout deal would collapse. He noted that one of the new parties, the Independent Greeks, would poll about 10%, and suggested that the party wanted to rip up the bailout document. Mr Price said that even the leader of the ruling Pasok party was now talking about change in the bailout deal.

May 3 business update 8.45am: Simon Jack noted that Greece had currently sold only €2bn of a promised assets sale – tied to its bailout conditions – of €50bn by 2015. It was noted that potential buyers were worried about whether Greek stayed in the eurozone.

May 3 8.54am: Evan Davis said that there was pressure in Brussels to ensure that banks had more of a stash of their own capital to lose before they lost that of depositors.

May 4 business news 6.15am: Mike Slade, of building firm Hellical said the eurozone problems were holding back a lot of major decisions.

May 4 6.37am: Chris Morris, previewing the French presidential election, said Francois Hollande wanted to change the emphasis from austerity to growth and was saying that current policies had failed to create enough growth in Europe. He added that the challenge was how he would deal in that context with deficits and debt.

May 4 7.16am: Evan Davis, noting that defence secretary Philip Hammond had said that Germany should contribute more to European defence. Lord Teverson – from the House of Lords foreign affairs committee – said that the US was thinking of drawing back from defence in Europe, and so ‘Europe’ had to get its own act in order. He added that the one player that was missing was Germany, ‘Europe’s powerhouse’. Mr Davis said there was ‘history’ and the Germans were reluctant to re-arm. Lord Teverson said that was 60 years ago and the country now needed to start pulling its weight.

May 4 8.10am: Nick Robinson noted that in the local elections, UKIP had amassed votes (not seats) that had prevented the Conservatives from winning seats, and that was now putting pressure on the party to ‘move to the right’

…to have a stronger voice on Europe and immigration and crime, to talk less about say, gay marriage or about House of Lords reform, (it)comes at precisely the moment the Liberal Democrats for the second year in a row get the worst results in their party’s history.

Evan Davis suggested to William Hague that people were stating

that the party should harden up, move to the right, be more populist on some of the things that matter to a lot of the voters who might be going to UKIP, you would say, that didn’t work for you when you were the leader and stood in the 2001 election, took the party into the 2001 election, David Cameron should stand firm and be Cameronian – Cameroonian in his politics.

Mr Hague said the government had reduced immigration, had changed the law on Europe to ensure a referendum if more power was given to Brussels.

May 5 bulletins: It was noted that Professor Bill Reilly of the British Veterinary Association had said that up to a quarter of animals in British abattoirs were now being slaughtered without being stunned, under EU law which said this was permissible to meet the needs of Jews and Muslims. It was said the Food Standards Agency disputed the figures.

May 5 7.39am: John Humphrys, reporting from Athens, said the election would determine whether Greece stayed in the euro or was forced out. He asked Aristotle Kallis, of Lancaster University if there was real anger with austerity. He replied that the election was between those who supported the austerity package and those against it. Mr Humphrys said no one wanted austerity. Mr Kallis agreed and added that this was a ‘crisis mentality’ poll in which people wanted to deliver bloody noses. Whatever happened, there would be a shift to more radical positions. Maria Eleni Koppa, of Pasok, agreed that there was a feeling against her party because it had introduced the austerity package. She said voters had to understand there was no ‘free ticket’ if Greece wanted to remain in the EU. She claimed that although Pasok had ruled since 2009, the Greek problems were the result of many years of misrule. She added that the need was now to speak the truth to the Greek people. Mr Humphrys suggested to Mr Kallis that it was ‘frightening’ that extreme parties were gaining ground. Mr Kallis agreed and said that those gaining popularity included the Nazi New Dawn. Both commentators agreed there was a lot of anger around.

May 5 8.43am: John Humphrys said that if the people of Greece voted for parties who were against austerity that was the end of Greece being a member of the eurozone. He added:

So it matters to everyone in Europe, including us obviously. But it matters more, of course, to the people of this country. They’ve had a rotten time of it over the past couple of years, and it’s going to get a lot worse. He noted that very few people had turned up to the final election rally of Pasok, illustrating that it represented the old politics ‘ the politics that most Greeks will tell you betrayed them’. He said he was in a café and refuge run by a charity – a development illustrating the Greek decline. He spoke to the patrons, who all said Greece was in a bad way and attacked their politicians.

May 7 bulletins: These reported that Francois Hollande – France’s first Socialist leader in 17 years - had said that austerity was not inevitable. Christian Fraser said it had been as much a referendum on Nicolas Sarkozy’s style of leadership as his reforms. He added that Angela Merkel had previously noted that the EU policy of ‘tightly controlling expenditure’ was not open to renegotiation. It was also reported that the ruling parliamentary coalition in Greece had lost its majority. It was noted that the website Conservative Home had published an alternative Queen’s speech containing a call for a referendum on Britain’s EU membership. Gavin Hewitt said in later bulletins that Francois Hollande had ‘raised the standard against austerity’ and saw his mission to lighten up everywhere in Europe. He added there were fresh doubts whether Greece could remain in the euro.

May 7 business news 6.15am: Tanya Beckett asked Lena Komileva of G Plus Economics if the French election results would lead to a change in eurozone policy with growth at its core. Ms Komileva replied that the Greek and French results sent the message that their was a voter backlash that was anti-austerity and anti- bailout. That raised questions about whether current EU policies could still be pursued. She added that France had difficult economic factors to deal with and the election result would not change that. She said the danger was that Mr Hollande would therefore – in calling for impossible change – would undermine market confidence. James Bevan of CCLA said a fall in the value of the euro was to be expected. He added that the Greek election result did not mean that Greece would definitely leave the EU but it did signal ‘more discussions’ and EU leaders ‘had to get their finger out’ and find a proper solution.

May 7 6.07am: Matthew Price said the Greek election result was a ‘real mess’ and the two biggest parties, New Democracy and Pasok – the uneasy coalition of the last government – still did not have enough seats to forma new government. He added that the message from the electorate was clear – only 33% had voted to support the parties who had agreed the bailout, while 65% had said ‘no’ to the bailout in its current form, while the vote for left-leaning parties who did not support the bailout had gone up from 4% to 17%. He said the upshot was that any government was unlikely to last. He added that meanwhile, the Germans had made it clear that there would be no change in the bailout terms

And there are those who are saying, look this is Greece right back centre stage of the European debt crisis once again, and it’s hard to see how, even if a shaky coalition can be put together, as I said, how that government lasts, and remember, by June, next month, they need to find not only another €11.5 billion in savings, they also need to push through another 70-odd reform measures. How’s that going to be possible with no government or simply a weak government?

May 7 6.48am: John Humphrys said:

Whatever government Greece eventually settles on, there are many here, perhaps most, who don’t believe that it will be a government in anything but name. The power to run this country they believe was stolen from then when the scale of their financial disaster was revealed and they were forced to accept a programme of austerity. That’s what this election has been all about – a protest against what they see as their new poverty. The ultimate protest was made by a retired pharmacist last month, and what he did has cast a shadow over these elections. Dimitris Christoulas came here to Syntagma Square, the home of the Greek Parliament and as the rush hour traffic roared past, he put a gun to his head and shot himself. In the note he left behind, he said, ‘I see no other solution than this dignified end to my life, so I don’t end that fishing through garbage cans’. He said that he was too old to fight, but one day young people with no future would take up arms and hang the traitors of this country, just like the Italians did with Mussolini in 1945. This tree beneath which he ended his life is now a shrine, and many people have been coming here to leave flowers and notes of solidarity. They’ve pinned many of the notes to the tree, and you can read them. One of them says, ‘Today the name of the deceased is democracy, there are still 11 million of us alive, and our name is resistance.’

Mr Humphrys interviewed Mr Christoulas’s daughter Emy, who said that since 2008, a nightmare had been hanging over Greece, imposed by the international finance system. Mr Humphrys asked if her farther had made the point that the government of Greece could no longer make its own decisions on behalf of the people. She replied that the government had turned Greece into a protectorate of enslaved natives. Her father had been a leftist fighter of the sort that there had always been in Greek politics. Mr Humphrys concluded:

Greece is still a long way from forming a new government, there may yet have to be another election. Whatever its makeup, it will have to take its orders from those who control its economic destiny, just as the last government did. It’s either that or pull out of the eurozone, and create a different sort of crisis – not just a crisis for Greece, but for the whole of the continent.

May 7 7.09am: John Humphrys said the Greek election had delivered a message that the people had had enough of old politics and old parties and of austerity. It was now unclear who would be able to form a government. Stefnaos Kassimatis said all hell had broken loose and the loony left was in control. He added the former two biggest parties had only 40% of the vote and therefore lacked the n moral legitimacy to form a government. He said the Socialists were the biggest party and would try forma government, probably with the Democratic Left party. He added:

It's a contradiction, 70% of the people in this country want to stay in Europe, in the European Union. At the same time, the same people the same percentage do not want to bear the consequences of that choice. That is clearly, that has been clearly shown by the polls before the election. It's absolutely crazy. And there's another aspect in that problem, the problem of having a reasonable government in this country, it’s, the kind of people will have in this Parliament, we talking about a Parliament consisting of comedians, actors, goons, thugs, I can't really imagine . . . If you look at the people who got elected in the major parties, most of what I would describe a serious people with, you know . . .

JH: Backgrounds.

SK: Yes, with a serious background have not been elected. This will be a circus not a Parliament, a circus of madmen.

May 7 7.14am: Reacting to the Queen’s speech, John Redwood said:

When we get nearer the general election, there will need to be a very strong Conservative offering that will be very different from the Liberal Democrat one, because a lot of us want a Conservative government in due course, because we want, for example, to tackle the mighty problem of Europe, and we understand that our partners in coalition, like a lot of European laws and regulations and want more of them, which we don’t.

May 7 business update 7.19am: Tanya Beckett said the value of the euro had dropped overnight. It was noted that the pound had risen against both the dollar and the euro.

May 7 7.22am: One of Francois Hollande’s advisors on European policy, Catherine Troutman, said that he would not ratify the new EU fiscal treaty if there were was not a change of emphasis (brief extract).

May 7 7.32am: John Humphrys said:

There were very different elections in France and Greece yesterday, the French voted for a new president, the Greeks for a new parliament. But the message delivered overwhelmingly by both electorates was much the same: we are not prepared to accept the austerity that has been ordered by the European Union. The reaction, from the financial markets, is entirely predictable, the value of the euro has already been falling sharply. The result of the election here in Greece must surely increase the likelihood that this country will, sooner or later, have to abandon the eurozone, return to the drachma. These are difficult days for the euro, and therefore, the whole European project. Let's talk about it, to a man who's been a European Commissioner himself, one of the great champions of that project, Peter Mandelson. Lord Mandelson, good morning to you.

PETER MANDELSON: Good morning.

JH: You said last week that Britain is only going to be able to assert its interests if it's part of a political and economic European Union. You're not still saying, are you that we should join at some point the euro?

PM: If the euro remakes itself, if it carries out a very serious structural reforms, changes that it needs, if we see a eurozone mark two, in effect, emerging over the next 5 to 10 years and if it is successful, then I believe that Britain should not rule out the option of joining the eurozone. But I do think, John, you put your finger on something this morning which is very real. I think that given what's happening in Greece rather more than in France, I think that we are going to see the eurozone yet further challenged, and I think what you'll see both from France and from Germany is a very united response. I think that both for Mr Hollande and Mrs Merkel, you're going to see the top priority being stopping the eurozone from splitting. I think that you will see both of them saying that everything that needs to be done to save the whole post-war settlement in Europe as well as the euro will require more European integration are less, it will require more Europe not less, and this, of course, was the point of the lecture that I delivered in . . .

JH: (speaking over) Yeah, in—in—indeed.

PM: . . . On Friday. Because I think it has big implications, not just for Europe but for Britain in particular, because we have a government that at the moment looks as if it's going to separate itself from the developments and try to take Britain in an alternative direction.

JH: But since you delivered that lecture, we've now had elections in Greece which has created even greater chaos if possible than existed before, and the possibility, the very strong possibility now that Greece is going to have to leave the eurozone. What effect will that have on the whole project?

PM: Well, should Greece leave the eurozone I think it would call into question the future, the whole future framework, and I think it would put a question mark over the risk of contagion, markets contagion and panic spreading from Greece to the periphery countries in the eurozone. But I'm not at all convinced just now that Greece is going to do that because Greece has no access to market funding to finance its national needs. It is wholly dependent on the huge scale of funding from the European Union and from IMF sources, it's whole economic future, its viability, depends both on carrying out a very deep fiscal and structural reforms that are going to take a long time to achieve . . . JH: Well . . .

PM: And it would have to ask itself how these things are going to be financed, you know . . .

JH: Well . . .

PM: Who would actually carry Greece during this very long period, how will it actually, by leaving the euro, affect and finance the transformation that it needs. And I don’t think that there are many people in Greece who think that simply dev—reverting to the drachma and devaluing its strategy is going to do that. It’s not going to provide the . . .

JH: (speaking over) Well, the, yeah, but . . .

PM: . . . foundation for, that, that Greece needs to rescue itself and to carry out the transformation . . .

JH: (speaking over) Well, well, that, that . . .

PM: . . . it requires.

JH: . . . may or may not be the logical position, but as you know from talking to many Greek people yourself the attitude here is . . .

PM: (interrupting) Yeah, I do. I do . . .

JH: . . . ‘to hell with it. Let’s (word unclear) let’s go bankrupt, abandon the debts, let ‘em pick up the pieces themselves and we will . . .’ You know, you know that is overwhelmingly the attitude here now.

PM: There is a very, very strong emotional feeling in Greece that somehow Greece has been sacrificed that it’s all . . .

JH: (interrupting) Yeah, it’s a victim.

PM: . . . Europe’s fault.

JH: Sees, itself as a victim.

PM: (speaking over) I heard somebody . . . I heard somebody talking to you as if they'd been a victim, a guinea pig.

JH: Yeah.

PM: Look, I have to tell you that most people in Europe, and indeed quite a few people in Greece realise that Greece is the author of its own misfortune, and that Greece and Greek politicians have to be honest enough to recognise that what it needs to do in Greece is a matter of sort of national necessity and national circumstance and not something which is being imposed from outside.

JH: Just a very quick word, a couple of sentences if you will: France - new president . . .

PM: Yeah.

JH: A bit more hostile than the last one.

PM: Well, you're going to see Europe's physical landscape in the balance of its thinking change with François Hollande’s victory, but I don't, however, believe you're going to see a great swing from sort of full- blown to sort of full-blown Keynesian stimulus. Partly because this is, they recognise that there is simply not the policy space or latitude to do this, but also because the consequent collapse of confidence by investors in the debt markets would cripple Europe's recovery prospects even further. You are, however, going to see a different European consensus emerging, you're going to say much more nuanced policy mix, and in my view, if it’s got right and the judgement and the pacing of the fiscal adjustment that needs to be carried out is better judged, I think the markets would in fact welcome this.

JH: Right.

PM: I think that they will want a greater emphasis on the growth and investment measures that François Hollande has been advocating. And as long as it's well, well-judged and measured, I don't think you're going to see market panic setting in, I think, on the contrary, you're going to see some market reassurance

May 7 7.44am: Evan Davis said that Francois Hollande was less showy than Nicolas Sarkozy. Gavin Hewitt said it was a really interesting moment for the Franco-German alliance because Mr Hollande had challenged austerity, the main German strategy for tackling the debt crisis and thereby, Angela Merkel’s leadership. Mr Davis asked if there would be compromise, which would be to add some growth-promoting measures to the austerity plans. Mr Hewitt said there was some room for compromise, including a possible appendix for growth using EU structural funds and maybe even a reduction in the targets for reducing deficits. But he said the Germans would not support was an increase in borrowing to boost spending. Mr Hewitt said there were also German red lines in the relationship with the ECB over the French proposal that maybe it might be able to lend directly to governments. So, there was room for ‘plenty of tension’.

Mr Hewitt was also asked to comment on the Greek election result. He said the majority of Greeks wanted to stay in the eurozone but also wanted to come back to Europe over the terms of austerity. He added that it would be interesting if leaders in Germany, Finland and Holland would go along with that and noted that the German finance minister had said membership of the EU was voluntary.

May 7 8.10am: Evan Davis said that in France, the electorate had decided plan 1 – austerity - was not working and Francois Hollande had become the torchbearer to promote growth and employment. He added:

It marks a challenge to the authority of the Germans in the EU, and a challenge to an economic orthodoxy. His victory was greeted with joy by enthusiastic crowds, and I was down at the Bastille, the moment the result came in. (sounds of cheering crowds) Well, the results indicate France is, to a very large extent divided this point, but they're not divided here in Bastille Square, thousands of people, (word unclear) joy, smoke bombs detonating, red smoke bombs, Socialist Party banners, the crowds cheering, ‘Sarko, it’s over’ they chant. Now, here, for them, things can only get better.

There were vox pops from the crowd saying how happy they were. Mr Davis then spoke with Natacha Valla, an economist from Goldman Sachs in Paris and asked if he would be leaving because of the 75% tax rate. She said she would wait and see and suggested there would be ‘pragmatism’ in Mr Hollande’s approach,

…my hope is that in the relationship with Germany, Hollande is going to see what European reality is, and he’s going to have to accept that the fiscal compact that we have all signed is a fact of life and on top of this fiscal compact maybe we can have additional discussions about growth. Now, the main thing is to be sure that everyone understands the same thing when speaking about growth, and I’m not sure that’s the case at the moment.

Mr Davis observed that Mr Hollande was pledging to eradicate the deficit by 2017, so he was not promising ‘fiscal madness’. Ms Valla agreed that the policies of both candidates were similar.

Now, it’s not clear yet how he’s going to finance the items that have been put on the table, so that’s still a big uncertainty, and I think those things will have to be clarified when the new parliament is there, when the new government is up and running and this might lead to some, you know, market uncertainties, perhaps not now but in July when France has to refinance quite a big, fair amount of debt, and when the parliament is up and running. ED: Right, so promoting growth, two approaches: the German approach is deregulate, structural reforms, sort out the labour market – what is the Hollande approach going to be?

NV: Well, I’m sure he’s going to be willing to start to launch some of those reforms as well, so we shouldn’t have a negative a priori (sic?) about that. I think some of the more worrying items will have to do with the finance flow that will be discussed by the parliament, that will have more short-term dimensions and short term spendings that might fear, you know, fear markets.

ED: Anyway, the great message is it’s the hard work starts here, he’s got through, he’s the president and now the difficult decisions have to be taken.

May 7 8.38am business update: Tanya Beckett said bond markets were stable despite the Greek and French election results, perhaps because they were expected.

May 7 8.45am: Evan Davis said:

Well, the French economy’s been growing faster than ours in recent years. It's a country whose government has been borrowing less than ours, so what were the French voting against yesterday? Was it a) Monsieur Sarkozy or Monsieur Bling-Bling as he’s sometimes called, b) unemployment which is running at a stubborn 10% of the workforce, or c) the German approach to economics: austerity. Well, we're all trying to purchase the French election result.

Mr Davis asked Jacques Attali, a former adviser to Francois Mitterrand, what the state of France was. He replied it had high wealth and debt of 80% of GDP, ‘not larger than Germany’. But there was an important problem in the balance of payments deficit. Evan Davis asked whether Mr Hollande would be a president who would say things don’t need to be difficult. Mr Attali said he would say the opposite, that urgent steps needed to be taken to control debt. Mr Evans suggested that France would now have a different approach to the EU. Mr Attali said that the EU had to be able to go to a federation, the political federation, or the euro would collapse. He added:

The euro will not survive in the next ten years, I would say even five years, if the eurozone doesn't move further into political integration. There is no currency in the world without a state, and the euro will follow the same fate.

ED: Have you mentioned this to the Germans?

JA: And the Germans are, many Germans are in favour of that, and the Germans will understand that if they don't do that the euro will collapse, and the worst victim will be the German economy, because they are so much intricated (sic?) into the rest of Europe, but all the analysis coming from everywhere in the world demonstrates that the more fragile economy in a situation with a euro break-up is Germany.

Maurice Levy of Publicis said that business was waiting for what Mr Hollande did, including with regard to taxes.

May 7 8.57am: John Simpson said that Nicolas Sarkozy would be seen in future as a kind of joker, ‘a kind of aberrant figure…not presidential in the grand way’. He added:

There was that awful moment where he came out after a weekend with Carla Bruni, his wife, and said, ‘The president of France has balls, and I promise you he’s been using them over the weekend.’ Impossible to think - ED: (laughs)

JS:. . . absolutely impossible to think that Hollande who’s actually . . . we saw him dancing around on the stage to La Vie en Rose last night, so I mean he’s not, he’s not just Mr Boring, but he is Mr Steady As It Goes, he’s not one of those kind of waxworks presidents that we’ve had in France throughout the Fifth Republic, five of them, grand figures, they all seem to be tall, except possibly for Mitterand, never cracked a joke in public and all terribly serious – it’s a bit unfair on Chirac that, I suppose. But then suddenly, you know, we get Sarkozy jumping up and down. Now we’ve got Hollande, steady as it goes, Mr Normal, how many people told me over the weekend, ‘he’s so normal’ when he was walking around…

ED: Well, is it going to be steady as she goes in policy terms now? Is this turmoil for Europe, or is this going to be a pragmatic period where they’ll the reach the usual European deal and sort a way through.

JS: That’s what I suspect, but it is going to be choppy waters, no doubt about that, it’s not a revolution here, absolutely not, but it will be a new stage, just as 1981 was a new stage, when the socialists came in there. It won’t have the same kind of violent effect on everything, but it will be . . . or powerful effect I should say, but it will, there will be changes. What Hollande and the people around him think, and having travelled around with him over the weekend, looked at them, watched them, talked to them and to him, is that the tide of Europe is going now in their favour, Germany’s just starting to change . . .

May 8 6.52am: Mark Lowen said fresh efforts were likely in Greece to form a government but they were unlikely to succeed because the Syriza party – which held the balance of power – wanted to rip up the austerity agreement. Chris Morris said the view from the capitals of Europe had not changed towards Greece, but there was a realisation that – despite the election result in France – they would have to work together. It was unlikely they would compromise in the terms of the Greek bailout. Mr Lowen said there were serious problems on the horizon for Greece because they needed the next instalment of their international loan by mid-June, coinciding with the probable next election date. He said:

Really, political instability and financial instability very much linked. Those who want fresh elections feel that perhaps it might bring the protest voters back to the political mainstream, but that is by no means given, by no means an uncertainty (sic?) it could actually deepen fragmentation, deepen the crisis here and prolong the instability for Greece and the eurozone.

Mr Morris added that Francois Holland did not want new money to help Greece, but existing structural funds and there were ‘an awful lot of those’. He said:

Some of his other suggestions, for example: making the European Central Bank lender of last resort, something that was much discussed last year, that really is a red line which Berlin isn't prepared at the moment across, so there are things that can be done, and when he says he wants to renegotiate the fiscal pact, I suspect that an addendum talking about growth may be the answer, the compromise between them.

May 8 7.35am:James Naughtie asked whether the euro crisis would make it more difficult for the Coalition to get the economy moving. Though the parties had different views about the euro ‘the crisis was one and the same for both of them’. David Laws, Liberal Democrat former chief secretary to the treasury, said that in 2010, the strength of the headwinds from the eurozone could not be predicted. Mr Naughtie said the eurozone crisis was not going away and Labour was doing much better than for a while.

May 8 7.53am: Justin Webb said the Greeks had voted against the austerity package to keep them in the euro, and the election in France of Francois Hollande had put growth ‘more assertively’ in the mix of euro- rescue policies. Stephanie Flanders said there had been a measured reaction from the markets, despite expectations that the French election result would have led to jitters. But Greek bond yields had again risen sharply. Mr Webb asked if the markets were actually saying that a little bit of growth might not be a bad thing. Ms Flanders agreed that they were. Mr Webb asked how growth would be paid for. Ms Flanders said there was nothing in Mr Hollande’s policies that made a dramatic difference, and the European Commission agreed that there should be more infrastructure programmes. On domestic policy, there would be no drastic increase in spending or borrowing. Ms Flanders added that in Greece, the majority of people, despite the election result, favoured being in the euro.

May 9 bulletins: These noted that the ‘Conservatives’ would be cheered by the introduction of a government bill that would ensure that Britain played no future part in future eurozone bailouts.

May 9 business news 6.15am: Trevor Greetham, an asset allocation director, noted that the euro area was only 10% of the world and they still had a positive view of trading outlook. Countries not affected by austerity would be spending slightly more in the short term. Gabriel Sterne of Ecotrix said the Greek electorate had spoken with a ‘forked tongue’ and really wanted to stay in the euro; the election result was an indictment of crisis resolution policies in that it was astonishing that so much debt relief had been provided without winning support for reform efforts. Simon Jack suggested that a firewall was being built to deal with a possible Greek exit. Mr Sterne agreed. Mr Jack suggested that the German electorate would not support further funds for Greece. Mr Sterne replied:

I wouldn't say it is a nonstarter. I think it's very difficult, but on the other hand if Greece does exit, well, what you face? You face at one trillion bill, and that’s not my figures, that’s according to the IIF, who negotiated on behalf of the banks and the exchange. And you've got lots of ECB exposure, European Central Bank exposure, the EU exposure, target to (?) balance these mercurial items, not to mention the contagion to Portugal, elsewhere. So one trillion or a few billion to rescue Greece, that’s (words unclear due to speaking over)

May 9 6.10am: Mark Lowen said that the leader of the Syriza block would only form a government in Greece if the other parties tore up the austerity terms of the EU-IMF bailout. He said Anthony Samaras had refused to comply saying it would mean the destruction of Greece. He added that there was now a ‘power vacuum’ and that meant there would be fresh elections, raising inevitable questions about Greece leaving the eurozone. Mr Lowen said that Greece could run out of money by the middle of June and the EU was warning that it must stick to the austerity path. He concluded:

So, if the ECB, if the IMF tries to impose more austerity here and refused to listen to what the voters said, then that would be seen as hugely undemocratic in the country which, let's not forget gave the world democracy.

May 9 8.38am business update: Carolyn McCall, of Easyjet, asked what impact the eurozone crisis was having on her business, said the uncertainty had been factored into their planning.

May 10 bulletins: These said there would be talks in Greece to try form a coalition government following the inconclusive general election results. Mark Lowen said that fresh elections now seemed certain, and this was a sign of the increasing polarisation between Greece and Germany. He added that many believed austerity had brought Greece to its knees, but Germany said that Greece must stick to its plans. Mr Lowen suggested that Greece was ‘emboldened’ by the election of Francois Hollande, who was ‘sceptical’ about austerity.

May 10 business news 6.15am: This looked at G0, a book by Ian Bremmer which claimed that no one was now in control of the world’s economic problems. He suggested that this meant that Europe would have to fix its own its economic problems. Santiago Carbó-Valverde, Professor of Economics at the University of Granada, said that if the new banking measures in his country showed that the government was serious about effective reform, the markets would become more optimistic.

May 10 6.39am: Mark Lowen said that hopes were fading in Greece about the formation of a coalition government after the leftist party – which wanted to tear up the EU austerity agreement - failed to win enough backing.

May 10 8.18am: Robert Peston said there had been the partial nationalisation of Bankia but more capital needed to be raised ‘by the system’ because there had been a vast property bubble, probably leaving the banks €140bn out of pocket. He said it was ‘uncomfortably like’ what had happened in Ireland, but on a much bigger scale. It looked like help would be needed from the EU and the IMF. .

May 11 bulletins: These said that Spain would be unveiling new reforms in its banking system and the EU had called for an independent evaluation of property assets held by the banks

May 11 business news 6.15am: Ian Powell of PwC said that confidence in British business was tempered by uncertainty about the eurozone, which fed fears about liquidity. Wilbur Ross, a US ‘turnaround investor, said that he would not yet be investing in Spain or Greece or Italy until things settled down and the true scale of debts was acknowledged. Ken Baird, a ‘restructure lawyer’ said no one wanted to buy into Greece yet because of sovereign debt issues or in Spain because it was simply too risky because of political factors.

May 11 6.32am: Justin Webb, noting that Spanish banks were being further reformed, spoke to Tom Burridge. He said that investors feared the banks had not owned up to the extent of their losses in 2008. He added that this was the fourth banking reform since the financial crisis began in Spain, including the nationalisation of the fourth-largest bank, Bankia. He said:

…the big problem in Spain really is the government doesn't have lots of spare cash to bail out banks, and if you look at the nationalisation, the part nationalisation of Bankia this week, it wasn't actually new cash coming from the government, it converted shares from public loans and then it became the majority, the biggest shareholder in the bank, so the government doesn't have lots of spare cash, it's trying to cut its budget, there's the austerity here to try and balance its budget, so that's the sort of fear - another fear that's probably spooking the markets.

May 11 6.37am: Mark Lowen said there was a glimmer of hope that in Greece a coalition might be formed if the Democratic Left party – which was not vehemently opposed to the EU bailout – would join the main two parties. Justin Webb suggested they thought they might get compromise out of the EU because of the desperation to avoid another election. Mr Lowen said it was a battle of wills to see who gave ground first and the Greeks now believed they had the new French president on their side.

May 11 8.10am: Pedro Schwartz, a professor of economics, said that the problems in Spain were the result of the bursting of the property bubble, with prices down 30% and likely to fall to 50%. He said the problem was that the government was reacting late and did not appear to have a plan, but they had estimated that a further €40bn was needed. Justin Webb said the Centre for Policy Studies in Brussels estimated that the real figure was €270bn. Mr Schwartz said that this figure was ‘fully provisioned’ and was not needed, but even if the figure was considerably less, Spain might still need bailout help, though mainly for the smaller banks because the big three had properly taken their exposure into account. Megan Green of Roubini Global Economics said that the Spanish banks would need much bigger recapitalisation from external financing. It also needed help with its sovereign debt from EU and IMF funds . She said the nettle should be grasped sooner, rather than being put off. She said that Spain had already been in talks with the European Commission and agreed to deficit targets and structural reforms. Unfortunately, that would hit growth in the short term. She added:

…we've seen this act before in Greece, Portugal and Ireland, medicine is killing the patient but unfortunately, EU leaders don't seem to be adopting a different approach to the crisis, and I don't think they will adopt a different approach in time to apply it to Spain. I think Spain will need a bailout for its banks by the end of this year, and I think the sovereign will need a bailout next year. But you're right, it is self-defeating, so even if Spain is taken out of the markets by this firewall, unfortunately, Spain and Italy are inextricably tied so Italy will need a bailout too, and the firewall is only big enough to support those countries maybe until the end of 2014. But when the bailout money runs out, both economies will look even worse, because both countries will have implemented austerity measures and structural reforms, so I think we’ll see a debt restructuring at that point for two of Europe’s largest economies.

May 12 bulletins: it was said that efforts were continuing in Greece to form a government and a second election was looking increasingly likely because no party was succeeding. Mark Lowen said the root of disagreement was the EU’s bailout terms.

May 12 7.12am: Mark Lowen said that efforts were continuing in Greece to try form a government, but it was unlikely they would succeed. Evan Davis asked how close the pro-bailout parties were to succeeding. Mr Lowen said they had only 148 supporters, 22 short of the target. He noted that the anti-bailout parties did not have the 50 bonus seats that the pro-bailout largest single party received, so they were also struggling. He added that despite this, polls were now showing that the anti-bailout party Syriza would probably win a second election. He said that tearing up the bailout terms would push Greece into debt default.

May 14 bulletins: Said that finance minister from the 17 eurozone countries would meet against a worsening crisis in Spain and Greece. It was stated that hopes of forming a Greek government were fading fast. .

May 14 business news 6.15am: Simon Jack said that eurozone bankers were talking for the first time of a Greek exit from the euro. There were a series of soundbites commenting on the Greek problems from 2009 to the present. He then asked Peter De Keyzer of BNP Paribas Florits whether a new phase was now being entered. He agreed it was because senior EU figures were now talking openly about the possibility of a Greek exit. The goal was to make the next Greek election a referendum on EU membership. He added that those on the left in Greece were hoping that the EU would lose the game of brinkmanship and be forced to renegotiate the bailout. He added that a Greek exit would be catastrophic for Greece itself and very bad for the eurozone. Mr Jack asked if it really would be catastrophic

Okay, what might be catastrophic is two decades of misery under an austerity programme that lasts for a long time. Is that worse than, for example, two years where you devalue the currency so import prices go up, the standard of living of Greeks goes down very sharply initially, but then they begin to rebalance their economy, people can go there on holiday, it’s nice and cheap to do things, and what they produce becomes cheaper, and the economy begins to grow again?

PDK: Well that’s something that people often, often refer to, I mean, devaluing the currency is good for your exports, but let’s not forget that Greece is one of the most closed economies in the eurozone and doesn’t really have a lot that is exportable that could actually make the difference. So devaluing the currency, by let’s say 40, 50% is only worthwhile if it’s unexpected and if prices and wages don’t adjust. But if, let’s say, Greek hotel owners realise there’s going to be a devaluation of 50%, they’re going to put their prices by 49%, and the effect to competitiveness will be near to zero. Additionally, of course, you would have to manage the fact that you won’t have access to capital markets for years in a row, I mean, the political situation is hardly stable right now, I cannot imagine how Greece exiting the eurozone will make the political situation any more stable there.

Markets guest Euan Sterling said it was difficult to keep track of bond markets because they were changing minute by minute in response to the Greek problems.

May 14 6.32am: Mark Lowen said talks in Greece about a coalition government were stalling because Syriza had insisted on tearing up the austerity agreement with the EU. He added that if the Democratic Left said yes to an agreement then there might still be a chance to scrape a majority. John Humphrys said that such a government would not have ‘moral authority’. Mr Lowen said it would have 168 seats out of 300, so a small majority, but it would not have a popular mandate because it would be made up of parties who wanted to support the bailout agreement and the further cost-cutting ‘rejected in last Sunday’s poll’. It would thus be shaky and could quickly fall. He added:

…And the big problem really is that if fresh elections were held, then the polls show Syriza, this radically anti-bailout party could come first, and that would really send the fear of god through European Union leaders, because they say that if Greece tears up its loan agreement with Brussels, really this country will kiss the euro goodbye, because it can’t turn its back on cost-cutting and yet keep the euro. One of the other astonishing things really last night John was that another of the parties that got into parliament last Sunday, Golden Dawn, the neo-Nazi party that shot to parliament for the first time in its history went in to see the president as well, the president held talks with all the party leaders. Now, the president of Greece was a resistance fighter against the Nazis in the Second World War, and he was welcoming the leader of a neo-Nazi party – just another sign of how extraordinary this situation is at the moment for Greece, and how unchartered territory this country is fighting.

May 14 7.09am: Gavin Hewitt said there was no appetite to renegotiate the Greek bailout deal because it was seen as a slippery slope to endless renegotiation. He added that EU officials were ‘in a bind’ and reluctant to discuss the consequences of Greece leaving the euro; they also did not want to be seen ‘interfering’, thus giving further credence to the Greek parties who were opposed to austerity. He said no-one was admitting that an exit strategy was being considered. Vicky Pryce, introduced as having been born in Greece and a former head of the government economic service, said the consequences of Greece leaving would be very serious in terms of contagion. She added that there was willingness among the EU to look at growth issues. John Humphrys said that the money given to Greece was not finding its way to ordinary people’s pockets. Ms Pryce agreed that very little had gone into the Greek economy, and that had engendered strong feelings. Mr Hewitt said he was struck by that Germany – including very powerful finance minister Wolfgang Schäuble – were discussing openly the possibility of a Greek exit. Ms Pryce said they were wrong if they thought the euro would be better without Greece because contagion had already spread, and if Greece left, the markets would turn their attention to other countries. She asserted:

Of course, what this will mean is that European growth is going to be reduced, and of course the ability of a number of countries to keep financing what is actually unsustainable debt levels is going to become much worse.

JH: There's got to be the worry, hasn't there, certainly on the part of sceptics, Gavin, that they are, they, whoever they are, but we all know who we mean, they are determined quite determined to keep the euro whatever, because it's a political and not an economic project?

VPH: I think you're absolutely right. I mean, the determination in Brussels amongst European Union leaders to keep Greece in the euro should not be underestimated. And I know there have been discussions as to whether, if there is going to be a second round of the Greek elections, European officials should essentially really toughen up their language, and warn these parties in Greece of what lies ahead if they insist on a renegotiation, and where it would lead.

JH: Yeah.

GH: And I think you might see a real battle with some very kind of lurid pictures being painted for the people in Greece.

JH: And, a couple of sentences, Vicky Pryce, where will we be in, let's give you six months from now?

GH: Well, for once I’m sort of lost for words, because I just don't know what the next elections will bring, but my bet would be, probably, that there will be a compromise, not a renegotiation of such but a compromise that will allow both sides to feel they've actually achieve something, and there is no doubt, we can't ignore the votes that said austerity hasn't really done it, and we need to find a different solution.

May 14 8.10am: Mark Lowen repeated the details of the talks in Greece to form a coalition government. He added that all the parties now understood that the anti-bailout parties had to be taken into account and that meant the possibility of fresh elections within four weeks. He noted that in Greece, unemployment was 21% and the economy had shrunk for the sixth successive year. He added what the EU was saying was that the country had not hit the bottom yet and a return to the drachma would mean further falls. Nikos Pappas, of Syriza, said that Greece had already defaulted and was still in the euro, and that austerity had been followed for two years but the country was still in deep crisis. He asserted:

Even the number of suicides has rocketed, and we have to put an end to these kinds of policies. I don't think that the future of Europe is the future that Mrs Merkel is dreaming for the European people. The money of the European people that Greece has borrowed has been used to save bankrupt bankers. No social needs have been covered, no plan for the recovery of the Greek economy has been put in place, no plan has been implemented to save society from total destruction.

John Humphrys suggested he therefore rejected the euro. He replied: No, no. Of course no. This is not the only way for the euro. On the contrary, what we say is that these kinds of policies put the euro into question. It is a question whether the euro could be, could survive these austerity policies that have driven Greece, having for five years are recession. So I don't think that if we keep going on this way, we could maintain our position within the euro system.

JH: Alright . . .

NP: The euro system is fundamentally wrong.

JH: Okay . . .

NP: And this has been proven.

JH: Yes, but alright, I’ll come back to that in a second, because the idea of a country as small as Greece saying ‘the system is wrong, 300 million people are wrong, and we’ll put it right,’ is something I want to pursue in a moment…

Elena Panaritis (introduced as a Pasok member, but actually an independent economist, she insisted) claimed that Syriza had confused reforms with austerity

and we have really also confused the very strong pressure to react and respond to austerity by not necessarily explaining very clearly to the people of Greece, as well as to the Europeans what kind of a crisis we’re dealing with, and what we’re ending up having is conversations that we should have probably had two and a half years ago.

She added that Greeks were being forced to work for lesser and lesser wages, sometimes down by 50% - the answer was a strong structural response and a strong government was needed. She said the Greek people were confused about what was happening and what was needed. What was needed was the best national plan for Greece. Mr Pappas refused to be drawn into speculation about another election, but said that IMF programmes had only ever brought societies into destruction.

May 14 business update 8.41am: Simon Jack said markets were down because attempts to form a new Greek government were floundering. Kathleen Brooks, research director at Forex, said that if Greece did leave the euro, it would still have to be supported by the EU, and there would be massive lock-downs of the banks so that money could not be taken out of the country. The next stage would be a slow devaluation of the drachma. Simon Jack suggested there would be a massive fall in living standards because the price of imports would rocket. Ms Brooks agreed and added:

In the long term, though, they can change their economy around so, either, you know, start to export more of the products and produce more of the products they export, or build up their tourism even more, then they could actually start doing well, because obviously then Greece would be a very attractive country to go to on holiday

Mr Jack asked why there wasn’t more panic in Greece. Ms Brooks said:

The first reason is that the European authorities are actually backing up the Greek banks, so they’ve actually got some money set aside specifically for the Greek banks to stop them from collapsing, so there is very little chance that the Greek banks are going to collapse any time soon. The other reason is that 70% of the Greek people actually want to stay in the eurozone – they don’t want to leave the eurozone, they don’t want to go back to the drachma, and I think that’s possibly one of the reasons why they’re holding onto their euros as tight as they can. SJ: And as a betting woman, and you’re in the financial markets so you kind of are – are they going to stay in, and if so, or if they’re going to come out, when’s it going to happen, how long have they got?

KB: I think that they’re going to stay in, because I think it’s far too damaging economically for them to leave it, and it would cost an absolute fortune not just for Greece, but also for Germany

May 15 bulletins: These noted that Francois Hollande, who would be sworn in as President that day, was travelling to Germany for talks with Angela Merkel, while George Osborne would attend talks in Brussels with other finance ministers. It was reported that Mr Hollande and Mrs Merkel could clash over austerity.

May 15 business news 6.15am: Simon Jack asked why George Osborne appeared to be backing down on reforms requiring banks to hold more capital. Jamie Dimon of JP Morgan Chase said the markets had in any case lost faith in these regulations. Simon Jack suggested that what was needed instead was more capital injecting into the system. Mr Dimon agreed. Mr Jack noted that Moody’s had recommended the credit downgrade of 26 Italian banks. Sony Kapoor, of Re-Define, agreed that austerity measures by the government were the root of the problem. Mr Jack said the government was trying to reduce borrowing. Mr Kapoor suggested that the market reaction was being spun to support the narratives of the various interest groups. He added:

The economic reality is that we are caught in this downward spiral where growth and a fragile banking system are weighing each other down.

He added that Germany had been able to escape from recession mainly because of flight of capital from other centres, eventually, it could be pulled down. Mr Jack asked whether German voters would approve of the terms of the Greek bailout being varied. He said there wasn’t a willingness among the electorate.

May 15 6.12am: This item noted that MPS were pressing to restrict the current free market in drugs across the EU because it was causing a shortage of some medicines.

May 15 6.31am: Christian Fraser looked forward to the planned meeting that day between Angela Merkel and Francois Hollande. He said there could be difficulties because of their different attitudes towards growth. He added:

I think in terms of temperament the two of them are close together, because he’s very much a pro- European, he’s a former state auditor, a former economist, and I think in that sense, if not on policy then certainly in personality and character, the two of them are closer together.

He added that it was not yet known what Mr Hollande’s approach to the Greek austerity package would be.

May 15 7.09am: Gavin Hewitt speculated about the meeting between Angela Merkel and Francois Hollande and said the differences ‘could not be disguised’ with regard to austerity. He suggested that there was some room for compromise in that the German had said more EU funds could be used for infrastructure projects, but also that growth could not be funded by extra government cash.

May 15 business update 7.19am: Simon Jack noted that latest figures indicated that Germany and France had avoided recession. Marie Diron of Ernst & Young said this was very good news. She was asked if this would strengthen Mr Hollande’s hand in demanding concessions about growth from Germany. Ms Diron said there might be some changes, but nothing radical.

May 15 8.10am: Justin Webb said the whole of Europe was facing ‘great peril’ if the Greeks fell out of the euro, with the former Greek prime minister warning of civil war. Simon Jack said that markets had been calmer because Germany had reported 0.5% growth, but he said that the UK, Greece and Spain were already in recession. Dr Michael Fuchs, vice-chairman of Angela Merkel’s political party and Karine Berger, a candidate in the French elections for Mr Hollande’s Socialist Party, discussed the latest developments. Ms Berger said that Mr Hollande did not want Greece to leave the eurozone, and there was a need to discuss how to bring it back to ‘equilibrium’. Mr Fuchs said he thought this would not go down well with Mrs Merkel because agreements had been reached within the EU about the Greek debt repayment which would have to be followed. Germany must not be the one paying the most money. Justin Webb said:

But are you not slightly persuaded by the argument that although, yes, Germany has put up a lot of the money, Germany also stands lose horribly, huge sums of money were Greece to exit in a chaotic way from the euro, and for that reason, ready for self-interest, actually, this might be the moment to think again?

MF: Yeah, but I don't think we can stop it. You know, as a matter of fact, the (word unclear) is not competitive, as far as their economies concerned there is no competitiveness and they have to come back to a path of being competitive. There are two ways: one way is they lower their costs, dramatically, the OECD has said that they should lower their costs by 40%, I don't know if they can do that, it's very, almost impossible; and the other part or the other way is to step out of the euro, but that could be done also on a controlled way, and I think the German economy has ring fenced this problem ready, so, I believe other countries have done.

Mr Webb put it to Ms Berger that this was a fundamental disagreement. She replied she though that France and Germany would adopt one voice. Mr Webb added:

Yes, and you are willing, you are willing, you say, you tell us that you would be willing, Francois Hollande would be willing to renegotiate with Greece in order to keep them in, and what we're hearing from Dr Fuchs is that certainly won't be something that the Germans (word unclear).

MF: (speaking over) No, no, no, no, no. You misinterpreted me.

JW: Okay.

MF: Because I say I want them to stay in, but they have to follow the rules.

KB: I, I . . .

JW: Yes, but hold . . . sorry, just to get this absolutely straight, I'll let you come back in a second Karine Berger, what I'm suggesting to you, and I think you're in agreement with this is that following the rules means following the rules that have already been laid down, you're not willing to renegotiate those rules?

MF: Yes.

JW: Okay. So Karine Berger, given that that is the position from the German side, and given that Francois Hollande would be willing renegotiate, how do you square that circle? KB: I think that we agree that Greece has a competitive problem, a competitiveness problem. I completely agree on that point with, with Germany. But anyway, the question is the agenda. If we ask Greece for full austerity now, they will not manage to have a situation of public finance which is sustainable. So we need to, let’s say, see what is the agenda that we asked Greece to, to, to fit in order to have let’s say an economic logic in the way we keep Greece in the eurozone, that’s the point.

May 15 8.40am: A report about the shortage of medicines affecting pharmacies said that supplies in the UK were being limited by the volume exported to the EU. In other parts of the EU, medicines cost much more, so the UK was now a lower-priced market. MPs had now said that trade within Europe, even though it was lawful, was causing problems. It was noted that this had caused an extra cost burden on the NHS, to the tune of £12m.

May 15 business update 8.44am: Simon Jack noted that Kent County Council had dropped Santander as an approved banker. John Simmons from the council said the council had decided not to put its money into Santander overnight deposits and he wanted to clarify to what extent the UK arm of the bank was ring-fenced. Steve Pateman of Santander UK said that the UK bank was ring-faced and any movement of money to Spain was controlled by the FSA. Mr Simmons denied he was being alarmist.

May 16, business news 6.15am: Simon Jack asked Jane Foley of Rabobank about continuing high bond interest rates in the context of the Merkel/Hollande meeting. She said rates remained on the up because of uncertainty about the fate of Greece.

May 16 6. 10am: Justin Webb said that the people of Greece probably held the future of the euro in their hands as they headed for a new general election. Mark Lowen said the election would be a referendum about the euro, whether they ditched the euro and took a massive leap into the unknown. He added that a key factor was whether Germany would change its position and there had been messages that it could be looking at a stimulus to growth to ‘complement austerity’. He said that EU and other leaders were not talking openly about the possibility of a Greek exit.

May 16 6.32am: Steve Evans reported on the meeting between Angela Merkel and Francois Hollande. He said the body language had been awkward, but there was a shift, even in Mrs Merkel’s circle, towards stimulating growth rather than ‘cutting’. He added that the stance to Greece had not, however, changed. Geoff Meade of the Press Association said that despite their differences, Mrs Merkel and Mr Hollande would have to work together and would, a resumption of the Franco-German dynamism “the old axis that Margaret Thatcher tried to break all those years ago”. He added that the European Commission was ‘furious’ about Mr Hollande’s rhetoric about growth because it felt that had been the approach it had been pushing for decades. .

‘

May 16 7.35am: Justin Webb noted that German finance minister Wolfgang Schaeuble and IMF chief Christine Lagarde had both said that it was not going to be possible to renegotiate and international aid plan for Greece. He spoke to Andrew Balls, head of European portfolio management at Pimco, the global investment firm, and Carsten Brzeski, a senior economist at ING bank. Mr Balls said that there was great uncertainty about whether Greece would leave – though it was more likely that it would - and market pricing reflected that. He said there was a need for the departure, if it happened to be properly managed and there was uncertainty about whether this could be achieved. Mr Brzeski said he thought that Europe was technically prepared for the departure and therefore it would be chaos if it happened. He added that the ECB would have to step in and there would be a need for more bailouts. Mr Balls agreed that the post-exit plans were unclear, and warned that it would be very de-stabilising. He added:

But we have these challenges of neutralisation of the debt, of the democratic process across countries, as you said in your introduction, the German finance minister came out today and was kind of rubbishing the idea that there can be any flexibility when it comes to this austerity programme Greece is meant to be on, so the challenge is huge. What happens in Europe is that you have crises and that forces leaders to try and cobble something together over weekends, you know, and in the middle of the night. This is highly risky, and there is the potential for an accident, just a failure of the European leaders to be able to deal a) with Greece as it is, but b) with the consequences of a Greece exit.

Mr Webb asked if it meant

…basically cash points running out of money, I mean, and trade stopping in Europe and banks simply not being capitalised. I mean, is it a serious potential, and is grave as that?

Mr Brzeski replied that it would mean the cessation of economic activity, so it was at least as serious as that. Mr Balls said:

I think that’s right, but there has been a game of chicken over one or two years, the Germans, the creditor countries saying, ‘Greece, you have to do this’, Greece making comments on its side that, you know, it is finding it difficult to do this austerity. The point now is it’s just falling apart on the Greek side, the political system seems to be imploding, they’re having another election starting next month, you know, why would anyone think this is going to lead to a clearer outcome. And the danger is that policymakers just lose control. It’s very dangerous this brinksmanship. I don’t think they have a plan – it’s not obvious to me, it’s not obvious to me that they have the political ability to hold it together, and so it’s highly, highly risky.

He warned that there was also a danger of a ‘cascading’ complete break up of the eurozone.

May 16 7.09am: Gavin Hewitt said that after the first meeting between Angela Merkel and Francois Hollande, they had issued a ‘rather reassuring’ message – that they wanted to keep Greece in the euro as long as it kept up with its commitments…

Francois Hollande even went as far as to say there could be some more growth measures in order to boost the economy later on, but at the same time there are the messages, to European ministers in the last 24 hours have come out and said the eurozone ready to survive a Greek exit – and then you had the head of the IMF, Christine Lagarde saying it was important for everyone to be technically prepared for the eventuality of Greece leaving the euro. So there are two messages out there, but the really important one is that ministers are saying things which only a few months ago they simply wouldn't, wouldn't have done, that there might be an exit from the euro by Greece

Dimitrios Droutsas, Foreign Minister of Greece from 2010-11, now an MEP for the mainstream socialist party, Pasok, was then asked whether the Greek election would be about staying in or leaving the euro. Mr Droutsas said the previous election involved people expressing their frustration at the bailout but not thinking about the consequences. He said he was convinced there would be a ‘re-thinking’ by the Greek people. Justin Webb asked if there had to be ‘tangible movement’ from the rest of the EU that allowed life to get better. Mr Droutsas replied that if all the Greek people heard from the EU was negativity, that was not good, but the statement the previous day from Merkel and Hollande was a step in the right direction.

JW: But not changing the terms of the bailout agreement?

DD: Listen, I think there is a little bit of a misunderstanding, nobody is talking about leaving this part of what has been agreed.

JW: Really? Some of the Greek political parties want to tear it up, don’t they?

DD: Well, yes, yes, but these are the populist parties who have played with the emotions of the people.

JW:(speaking over) Yeah, but they are still ahead in the polls, some of them.

DD:. . . and this big suffering. Yes, but now we are heading for new elections, we need a serious discussion and political discourse in Greece and here the European Union can help, but in a serious manner, not by just expelling threat, you are going to be kicked out from the euro, but by saying in a very serious manner what can be done to really support Greece.

May 16 8.10am: A report about the extent to which Greece wanted to keep the euro and whether EU leaders were fighting to keep Greece in. Justin Webb, reporting from Brussels, included opinion from passers by for and against Greece leaving. Mr Webb then interviewed Guy Verhofstadt, a former prime minister of Belgium, and put it to him that Greece would ‘win this battle’ because the consequences of leaving the euro were too awful. Mr Verhofstadt said it would be a bad thing if Greece left the euro. Mr Webb suggested that because of that they were in a better bargaining position. Mr Verhofstadt said there was no firewall around Greece

…EFSF, ESM, these rescue funds, but the real firewall, neutralisation of the debt, a real Eurobond market like the Americans have also for their dollar, we don't have it and the consequence of this is that Spain, neither Italy, can recover because they have still interest rates to pay a 6%, and only a neutralisation of the debt, what we call a redemption fund approved yesterday by the European Parliament now, in the new legislative package is the solution for this crisis.

Mr Webb repeated that the consequences of Greece leaving were too awful to contemplate. Mr Verhofstadt said there was no possibility of it happening. This was challenged by Mr Webb, who said some EU leaders were mentioning it in ‘sanguine’ terms. Mr Verhofstadt replied:

European leaders are saying that because they think that again they give some signs to the Greek public opinion. I think it's a bad thing, don't say to the Greeks what they have to do, the Greek people shall decide, they have decided already the first time, and they shall decide, hopefully in a different way, on 17 June. But that is not the task of the European leaders, European leaders already two years have taken half measures, have now taken a real . . . have no find (sic) a real solution for this crisis. And the reason is that this crisis is not about Greece, it's not about the public finances in Europe, it's because there is a lack of economic and fiscal union. We have a monetary union but no economic and fiscal union, we have no (words unclear due to speaking over).

Mr Webb suggested there was not enough time to deal with the issues before the next Greek election and asked if in the meantime a message of compromise would be sent. Mr Verhofstadt said he did not think Greece could renegotiate the package and there were not enough structural reforms. He added that extra funds were available in the Greek package of aid. Mr Webb also spoke to Richard Corbett an advisor to Herman Van Rompuy. He suggested that in the wake of the election of Francois Hollande, everyone on the Council wanted growth – the trick was finding how it could be achieved in side existing structures and measures. He asserted:

..this trick is to look at the structural side, that's all that's left in most member states, not all, the most member states of the European Union. And there were looking at what measures can be done, many of them are national level measures, of course, but what more can we do a European level, deepening the single market . .

Mr Webb asked why this could not have been done a year ago. . Mr Corbett said they were thought of then, but it took time to ratify and agree things, and also, events moved on. He said the heads of state of all 27 countries would meet the following week to consider the new impetus towards growth. Mr Corbett said no one was planning for a Greek exit. Mr Webb noted that the head of the IMF said there should be contingency plans.

May 16 8.47am: Dr Eurydice Georganteli, lecturer at the Institute of archaeology at the University of Birmingham, agreed with Justin Webb that usually politics came first and money followed. She also noted that the Athenian Confederacy in the fifth century BC had a stable currency based on careful political and economic consideration. When challenged she said that the politics were stable and the currency followed.

JW: Hmm. Do you think archaeologists in the future will be discovering euros and treating them as a strange historical anomaly that didn't last long?

EG:I hope the euro not only survives but also becomes a much more competitive currency than it is now. You see, currencies are not just a means for transaction, they are a country or a confederacy such as the eurozone or the European Union, they are part of their, of their culture and economic identity.

May 16 8.55am: Matina Stevis of the Wall Street Journal, and Peter Spiegel from the Brussels bureau of the Financial Times discussed latest EU developments. Mr Spiegel said the message that was emerging from Hollande and Merkel was that the Greeks had to decide whether they were in or out of the EU. Ms Stevis said this was what the Greeks were being told but they were actually voting for a new government and would likely continue to vote anti-austerity. Mr Spiegel said that if Greece did exit the euro, the consequences on banks would be dire, and so the strategy was for the EU to push as hard as they could so that they would give way and say they wanted to stay in. He added that Angela Merkel was nevertheless going softer in her rhetoric and was suggesting more Eurobonds and subsidies.

May 17 bulletins: David Cameron would warn that the euro was at a crossroads but he would do whatever necessary to protect the UK economy. Christine Lagarde of the IMF had warned Greece that it would have to accept the EU bailout if it wanted to stay in the eurozone.

May 17 Yesterday in Parliament: Sir Peter Tapsell asked if Angela Merkel now regretted not firing her big bazooka last autumn because it would have spared the EU from its present crisis. David Cameron said that the EU had to build a proper firewall and protect the weakest members, or go a different direction. Mr Cameron also confirmed to Ed Miliband that he had met Francois Hollande and would speak about improving European growth before the G8.

May 17 612am: Ben Wright said the prime minister would warn that the eurozone could break up. He said the UK was ‘not part of decisions’ so did not have leverage, but Mr Cameron would warn that he wanted more support for the euro through an increase in the bailout fund and in making sure that banks were properly capitalised. He added:

Importantly, you'll also insist there is not a choice between austerity and economic growth, that the two are tied together and that's a key message aimed both at leaders in Europe – where there is an anti-austerity backlash by voters in Greece and France, and that voters here, acutely aware that Britain is back in recession and the economy is growing.

Mr Wright noted that Britain was in recession while the rest of the eurozone was not and that voters were losing confidence in the government’s handling of the economy. He added:

Labour, of course, always argued for a slightly slower timetable for bringing down the deficit, and more spending now on jobs and measures to eliminate the economy . . .

May 17 6.11am: Ben Wright said David Cameron would deliver a speech in which he would warn that the collapse of the single currency was close.

…he's telling countries that have the euro to support their currency more strongly by increasing their potential bailout fund, making sure European banks are well capitalised and giving more fiscal support to weaker European economies. So David Cameron is saying to them, ‘get on with it, sort it out, there is clearly a lot of urgency here’, and he'll say, ‘we're in uncharted territory, that carries huge risks of everybody’. Importantly, you'll also insist there is not a choice between austerity and economic growth, that the two are tied together and that's a key message aimed both at leaders in Europe - where there is an anti-austerity backlash by voters in Greece and France, and that voters here, acutely aware that Britain is back in recession and the economy is growing.

Mr Wright noted that polls were suggesting that the public were losing faith in the government’s economic competence.

The fact is that Britain is in recession while eurozone as a whole is not. Public confidence in the benefits of austerity cuts seems to be slipping, as living standards are squeezed, one recent poll gave Labour a lead on the key question of economic competence for the first time in several years, and it seems that there are voters losing confidence that the government is called the big question on the economy right. Labour, of course, always argued for a slightly slower timetable for bringing down the deficit, and more spending now on jobs and measures to eliminate the economy

May 17 6.34am: Noting that the head of the IMF had said that Greece must have the ‘political resolve’ to accept the conditions for its next loan, Matthew Price said the rhetoric was ramping up, with Jose Manuel Barroso warning that the next election would be a referendum about membership of the EU. He was trying to scare the Greeks to support the continuing bailout. James Naughtie said:

Because of course, the mess that would ensue, were the rest of Europe to have to cope with a refusal of the Greeks to accept the package would be immense, as everyone now knows? MP: Absolutely and that is becoming clearer by the day, if you listen to what the Spanish prime minister was saying yesterday about their borrowing costs going up, you have the Irish finance minister saying that he is not certain anymore that Ireland will be able to return to borrowing on the markets by 2013 as planned, and then in addition to that you have this what looks like the beginnings of a possible run on the Greek banks themselves, (words unclear due to speaking over)

Mr Price, discussing the possibility of a run on the Greek banks said that €1bn had been taken out over the past week, though deposits had been falling since 2009 and analysts were saying that the need for another election was causing further nervousness. He added that the EC had also said that some banks were now deemed as insolvent, so there was an overall picture of ‘great instability and insecurity’.

May 17 7.09am: James Naughtie noted that the ECB had stopped lending to Greek banks on favourable terms. Mark Lowen said that Greeks were withdrawing 100s of millions of euros from banks. Vox pops confirmed this. A spokesman for the Greek Chamber of Commerce said €900m had been taken to put into other banking centres because of the ‘ungovernability’ of the country following the elections. He added that over two years there had been a capital flight of €63bn. Mr Lowen said people were now using the ‘deposit fund’ in Athens because of fear that the drachma would be re-introduced and the euro would become worthless. There were further vox pops. Stephanie Flanders confirmed that since 2009, bank deposits had fallen by a third. She added that the Greek banks were now heavily dependent on funding from the ECB, and it was now stopping ‘favourable deals’. She said it showed that ‘accidents happened’ when there was no government. Banks were supposed to be re-financed by the bailout deal and that was now on hold. She said that funding from the ECB was ‘keeping the entire Greek financial system afloat’. She added that the ECB wanted to send a message to Greece that this was not about ‘paltry’ sums.

May 17 7.32am: Vince Cable suggested that Vauxhall would remain open in Ellesmere Port because of ‘the rather attractive exchange rate’. Sarah Montague asked how business people were preparing for the break up of the euro…

I mean, obviously, you know, many people will be hoping that it doesn't happen, given its possible effects on us, but if you, even hoping for the best, if you're preparing for the worst what should you be doing?

Mr Cable said the risk needed keeping in perspective because Greece was only 2% of the EU economy.

But there is no reason why that should happen, they are in the process of creating firewalls, to prevent the financial crisis spreading and we hope that they do. But as far as the UK is concerned we can't directly influence what’s happening in the eurozone, because we're not part of it… we don't have direct influence over what's happening in the eurozone, and we certainly shouldn't be panicking or indeed be unduly negative, because there are some positive things happening.

He added that Britain was doing very well in seeking to export to alternative markets such as China and Brazil.

Ms Montague asked if David Cameron’s remarks about a possible break-up of the euro might have a negative effect. Mr Cable said there was a need to be positive and honest.

May 17 8.10am: Justin Webb reported from Germany about the country’s attitudes towards the Greek crisis. Vox pops from Cologne gave differing attitudes to the idea of Greece leaving the euro. An academic said that Greece had to be dealt with because it was only 2% of the EU GDP and not managing the problems would be seen as a sign of weakness. Another said that the Bundesbank was heavily exposed to Greek debts and splitting the eurozone would be very expensive. Joken Ocht, a victor against Angela Merkel’s party in recent elections, said that Greece must be helped. He added:

Germany is not Angela Merkel and there are many politicians all over Germany who have the same opinion than I. Angela Merkel has not really a vision of Europe, yeah, this is just an economic thing. The future of Europe is a hard thing, you have to bring the people of Europe together, even the young generation needs a new vision, because pieces are normal for all of them, they think, well, 60 years of peace, we've all had that, and we need our new vision of Europe for the next 50 years.

James Naughtie then interviewed Lord Lamont, and asked what the UK issues were about the possibility of Greece leaving the euro. He replied the crisis was ‘extremely threatening’ to the UK and that the departure of Greece from the EU was beginning to look inevitable. He added that the views of the German politician that more money might be available were ‘not typical’, and added that the situation in Greece was likely to get worse to the point where they would be asked to leave the euro. He said this would affect the UK indirectly because banks , especially French ones, would be hit and would have a corrosive effect on business confidence as well as being ‘profoundly destabilising’.. He added the second election in Greece, if it was inconclusive, could trigger an exit. James Naughtie noted that Francois Hollande had said he would not back the French bailout unless it also included measures for growth. Lord Lamont said it was too late to amend the new EU fiscal proposals that were being put to Ireland in a referendum, so this was a separate track. Nick Robinson said that David Cameron would deliver a speech later in which he would say that growth and austerity were not alternatives. He noted that the government was getting a lot of criticism from the public for not stimulating growth, but now wanted to spread the message that they were not anti-growth:

In other words, if Europe wants to come up with new funds for the European Investment Bank to invest in infrastructure, if it wants to marshal some of its so-called structural funds for a scheme for youth unemployment, all of these things they're perfectly happy to consider in Whitehall, but what they want to make sure is that there is no reduction in the speed or the depth of deficit reduction in other words, those spending cuts and tax rises. And that, of course is then the central argument in British politics: the reason David Cameron is waging this today, of all days, is that anxiety after the local elections, after a series of defeats for European governments - remember Sarah, 10 eurozone governments have fallen since 2008, that he could be next. And the reason Labour are so desperate to respond to it if they think this is their one moment where they might be about to win the argument on the economy, and they're determined not to let David Cameron get his own way on this.

May 18 bulletins: Robert Peston said that Moody’s had decided to cut the credit ratings of 18 Spanish banks including the UK arm of Santander. He said the influence of such decisions could be ‘over-rated’ but added that the announcement could not have come at a worse time because there was already a big erosion in confidence in Spanish banks. He said the downgrade was in response to difficulties Spain was having in increasing its deficit. Other versions of the bulletin mentioned debts owned by Spanish property companies and continuing high unemployment.

The bulletins also mentioned a meeting of the G8 at which David Cameron would meet Francois Hollande for the first time. Mark Mardell said the White House was going out of its way to praise Francois Hollande and to say that growth and jobs were imperative.

May 18 business news 6.15am: James Bevan of CLA said that the credit levels of Spanish banks had been downgraded, and this would bring Santander under the close eye of the UK regulator. He added that he was worried that no one seemed ready to tackle the underlying problems, which related to the levels of debt and competitiveness. He warned that some indicators seemed like 2008. Jeromin Zettelmeyer, deputy chief economist at the European Bank for Reconstruction and Development, said that Eastern Europe was being affected by eurozone banks lending less. He also noted that lots of southern European countries had close ties to Greece.

May 18 Yesterday in Parliament: George Osborne warned that talking about the problems of the eurozone could cause further instability. In a continuing debate about the problems, he also offered a solution to the problems. He stated:

Countries in the periphery with high deficits and uncompetitive economies need to confront their problems head on, that is what indeed governments in Ireland and Spain and Italy are doing, we are doing it in Britain too, but the adjustment in our country that we must go through is made easier by loose monetary policy and a flexible exchange rate. The countries of the eurozone don’t have that to help them, so the core of the eurozone and the European Central Bank need in our view to do more to support demand and share the burden of adjustment.

Former chancellor Alistair Darling said that there had been a significant shift in government policy towards supporting measures that would stimulate growth, though the same was not being applied in the UK.

May 18 6.10am: John Humphrys said G8 members were meeting with the eurozone crisis high on the agenda. Mark Mardell said that president Obama was very welcoming of Francois Hollande’s stress on growth rather than austerity. He added that the White House now hoped that the EU would now listen to it. There was pressure on Angela Merkel to do more, and the US simply did not understand why the ECB should not act more like the Fed, and become a central bank. He added that opinion was divided in the US about whether Greece would leave the eurozone, but felt it was vital that the eurrozone ‘did not go down in flames’.

May 18 6.37am: Tom Burridge said that the three biggest banks in Spain were among those downgraded by credit agency Moody’s. He added that El Mundo had reported that €1bn had been withdrawn from the banks over the past few days, but he said there had been no withdrawal queues. He said that Spaniards did not like to be mentioned in the same way as Greece, but added that economists were expressing concern that Bankia, which had been nationalised, might need extra support. .

May 18 7.14am: Robert Peston said that a number of Spanish banks had been downgraded in their creditworthiness. He said it was largely a catch-up exercise.

May 18 7.17am business update: the MD of a Greek UK-based food importing company said the eurozone crisis was not affecting his trade at the moment, and said that if his country left the eurozone it would not have an impact because olive trees and tomatoes ‘would not go away’. Simon Jack asked if the ensuing devaluation would help. The MD replied that he was not sure but that an internal devaluation was already going on because of austerity and that was helping. He added that Greek people felt ‘very deceived’ by the policies of politicians such as Angela Merkel. He said:

someone needs, before they go to the polls in thirty days, someone needs to explain to them in very simple words, not in complex financial models, what an exit from the euro means for them. I don’t think that anybody knows that. I don’t think that the people who vote, the voters, I do not think . . . there are very few people who understand that, very few.

May 18 7.31am: Justin Webb said the extent of Spanish bank losses was unclear. Inigo Fernandez de Mesa, a junior minister at the Spanish Treasury, said that he did not believe Greece would leave the EU and said that Spanish banks were well-funded. He said the real problem was in the property sector and the issues there were being addressed. He added that the government had adopted a phased strategy that included two stages. Under further questioning, he insisted again that Spanish banks were well-funded. Justin Webb said:

What you say to a Spanish person who is out of work, maybe a young person facing the prospect of really difficult times, for years, and who says to you, well, hang on a second why are we doing this, why the great struggle to stay in the euro, we're a sophisticated country, we can export things, we could survive on our own?

IF: I think the euro has provided in the past two was a lot of advantages. I think Spain has improved a lot over the last 10, 15 years, it is true that now we are facing difficult times, but I think that the Spanish economy is starting to perform well. Last year it, even, we are running trade surpluses with the euro area. We are expecting this year to have a trade surplus internationally, and a current- account surplus next year. So this means that Spain is a competitive economy, that we are adjusting quicker than many people in the international markets are now envisaging.

May 18 8.10am: Justin Webb’s report looked at the downgrading of Spanish credit and the danger of contagion . A series of vox pops said times were tough on the streets and in tourism. A Spanish academic (Pablo Triana) said people were beginning to think about a new Spanish peseta although, despite the news, the main banks were safe. He added that if Greece did exit, then Spanish people would be emboldened ‘to demand similar actions’ . Other academics said there was a lot of fear about what might happen. One said:

I mean when they came into the euro, the Spaniards were so proud to make it in and I think it was like, okay, we've arrived, now where here, and this is the rest of our lives, right? There was never any question that this was a good thing for Spain, and this was a permanent thing to Spain. And to shake that up, it just puts cracks in the project. I don't know how you would repair them.

A director of a think tank said the ECB needed to act to calm markets and nerves and it was not understood why they were not doing so. She added:

And the thing is that they’re also saying a lot about a possible bailout for Spain and intervention and so on, but also in Spain the perception is we’re too big to fail, and if we fail, the rest may come behind us. So why doesn’t Germany give a signal, a clear signal that yes, we are behind, we are aiming to help Spain and we are aiming to help all the other countries?

JW: Spain is not Greece – that’s what everyone here tells you. We may be about to find out if it’s true.

May 18 8.54am: In an item discussing prospects for Spain, Ute Miller of Die Welt and Giles Tremlett of the Guardian briefly said that the country was working hard to overcome its problems. Simon Jack said that shares in Spain had fallen sharply but then stabilised, including the banks. Mr Miller said that because the Spaniards were trying to overcome their problems, what was happening was not fair. John Humphrys asked if people with money in Spanish banks should worry. Simon Jack said that Spanish banks’ UK subsidiaries were ring- fenced.

May 19 bulletins: These said that G8 meetings were trying to reach a deal about tackling the eurozone crisis. Norman Smith said that there were signs that the leaders were pulling in different directions. David Cameron had warned that the financial transactions tax backed by France would cost jobs and revenue. It was said that Angela Merkel was coming under increasing pressure to abandon her opposition to spending German taxpayers’ money to ‘prop up the ailing eurozone’. There was actualitly from Jose Manuel Barroso, the president of the European Commission, who said efforts would be made to keep Greece in the eurozone. Robert Chote, of the UK office of budget responsibility, was quoted as warning that an exit by Greece from the single currency could do ‘irreparable harm’ to the British economy.

May 19 7.09am: Steve Kingston reported on the first meeting between David Cameron and Francois Hollande at the G8. He said it had been awkward at times because Mr Cameron had declined to see Mr Hollande during his visit to Britain during the election campaign. In addition, David Cameron wanted to knock on the head the French proposal for a financial transactions tax and had differences with him over policies to Afghanistan. Mr Kingston added that the G8 leaders were still waiting to hear a clear signal from Angela Merkel that she wanted Greece to stay in the eurozone, following her ‘fierce denials’ that she had asked for a referendum on the topic. He added:

And we've also had here senior EU leaders, Mr Barroso and Mr Van Rompuy from European Union themselves being forced to deny report that came from one of their own EU commissioners who had said that contingency plans were being drawn up for Greece to leave the euro altogether. They say that that is not happening.

May 19 7.12am: Mark Lowen noted that Angela Merkel’s office had denied that she had proposed that Greece hold a referendum on euro membership . He said that if she had, it would be a remarkable turn-round because she had strongly opposed such a move in November when the Greek prime minister had suggested one. He added that it had possibly been a slip of the tongue by the new government spokesman. Mr Lowen said it had caused major ripples in Greece and fresh calls for the bailout documents to be ripped up. He said:

Now, there is a lot of anger here against Germany pushing through the austerity measures, pushing through the cost-cutting which is so unpopular. Possibly what Mrs Merkel, if indeed she did suggest that, is counting on is the fact that most Greeks, according to opinion polls want to keep the euro. But putting it to the test in a referendum would be an extremely high stakes gamble, and it is something that really would be quite stunning, given that Germany has been such a firm advocate of Greece sticking to the euro and Greece.

May 19 7.33am: James Naughtie suggested that President Obama would try persuading Angela Merkel, the German chancellor to adopt policies that would encourage growth. Economist Laura Tyson suggested that the Obama camp felt that a financial crisis in Europe would threaten US growth. Mr Naughtie said that Mr Obama might find the policies of Francois Hollande more attractive than those of Mrs Merkel. Ms Tyson agreed and said there were similarities in their approaches, especially in the need to invest in education, research and infrastructure. Steve Evans, speaking from Berlin, said the Mrs Merkel was very in favour of growth but,

I don't think there's going to be any kind of Damascian conversion to Keynesian stimulus. I've been talking to two groups, officials within the finance ministry last night, and MPs within the government side, and there’s absolutely no indication of a change of heart, quote, ‘stimulus would spook investors’, ‘you don't get growth by running a big deficit’, but a recognition in the ministry that you have to give Monsieur Hollande something, quote, ‘the impediment to growth is structural’, they think that you can free up spending from funds in Brussels which are being ill-used, or not used for growth friendly projects if I can use that awful jargon. But, there is no belief that stimulus long lines at Mr Obama appears to be talking about woodwork or as possible, and I think it's certainly not possible, politically and Germany.

He added that German MPs were now talking openly about Greece leaving the euro and suggesting that the election there was a referendum on the issue. He added that such a move was thought to be ‘containable’.

May 19 8.35am: John Humphrys said it was the accepted view that the eurozone crisis threatened the world economy and it was thus top of the agenda at the G8 meeting. Daniel Kelemen, an economist from Rutgers university , said:

I think that while the situation is bad right now, we're not on the edge of a total collapse of the eurozone. Even the Greek exit, if it comes to that will not lead to a complete collapse of the eurozone. At the end of the day, Germany and the ECB are not going to let that happen.

Mr Kelemen further said the cost of letting the euro collapse would be catastrophic and they would thus change their policies. He added that it would survive but recovery would take years. John Humphrys suggested he was ignoring the capacity of crises to be self-perpetuating. Mr Kelemen said there was lots of room for panic and contagion, but the cost of potential failure in Italy and Spain would be so high that leaders would be forced to step in and prevent it. He added that there could be serious unrest on the streets, however, the like of which had not been seen for long while.

Mr Humphrys then spoke to shadow business secretary Chuka Umunna. He said:

Well, I mean, in terms of what he is saying, this, if you like, is the new normal, I think it would be an absolute dereliction of duty on the part of policymakers to accept that and to go along with it. We should be doing everything we can to ensure that the current situation is as abnormal as possible, and that it is resolved as quickly as possible. I mean, the reality of the situation I think many people watching you, who've been watching and listening to what's been happening, it seems perhaps sometimes a bit abstract, but the reality of the situation for us in the UK, is, you know, over 3 million jobs in the UK depend on Europe, the impact of what happens there is felt in terms of business confidence here, and also, of course, our banks still have exposure to European sovereign debt. So it's absolutely crucial that we get this resolved as soon as possible. And as always, why, frankly, if you go back to December and the European Council where the prime minister so spectacularly fell out with the other leaders in Europe, we were saying this is precisely why you need to have a Prime Minister who is deeply engaged with what's going on. And the shame of it is, actually, but he doesn't seem to have learned from that, so, for example . . .

JH: (speaking over) What he’s learned is the reason that Europe is in the crisis it's in, if it is a crisis, is because governments borrowed too much over too long a period, and couldn't pay back again. And he's determined that we should not do that, he wants to cut our borrowing, absolutely sensible, isn't it?

CU: But the point is, as Christine Lagarde, the head of the IMF as stated, to have credible fiscal policies, to have credible policies to reduce deficits, you've got to have growth. It's interesting, Daniel Kelemen actually has written in a foreign affairs magazine about the kind of approach that needs to be adopted, and he's argued, as we have argued, that you’ve got to have measures to spur growth. My leader, Ed Miliband, has written a piece in the Financial Times today, where he's talked about the cause of what we're seeing, and that's what he calls Cama-Kozy economics, which is going blindly simply for austerity, whilst ignoring the growth. JH: Nothing to do with the fact that we were left with a deficit the like of which we'd never quite seen before, and your own Treasury Secretary said at the end, when he handed over his office to his successor, he said there is no money left. You ignore that do you?

CU: Let’s reflect on the fact that today when the G8 leaders are meeting, save for Italy, the Cameron is the only person sat round the table who has led their country into a double dip recession. I mean, when my government left office in May 2010 . . .

JH: Well, he inherited (laughs) he inherited one, didn't he? So you can hardly say he led us into two?

CU: Well, he did not inherit a recession, he actually inherited an economy that was growing with unemployment falling and a recovery that was setting (word unclear due to speaking over)

JH: (speaking over) Alright . . .

CU: And we now have got a double dip recession, and almost 2.6 million people out of work, which was not the situation found himself in . . .

JH: If . . .

CU:. . . when he became Prime Minister.

JH: If you want to have growth are you tempted by the idea, put forward by Phil Collins yesterday, and a few other people have made much the same point, that what you could do is you could take a bit more money back from the wealthy middle-class, particularly pensioners, who benefit from things like heating allowances and free transport, use that money to stimulate growth, to stimulate some infrastructure spending for instance.

(Moves on to discuss the domestic UK economy).

CU: On the broader point of getting growth going in the eurozone area, I think we need to do a number of things, I mean, first of all there is a real worry at the moment about the situation of European banks, we got to ensure that there are mechanisms ready to step in, in the way that we did in 2008/9 to ensure that those banks do not collapse, because that could have very serious issues . . .

JH: (speaking over) And we’d help, would we, we'd put money into that?

CU: Well, no, we're not actually part of the euro— . . .

JH: (speaking over) No, I know we’re not, but I’m saying . . .

CU: (speaking over) We’re not part of the euro.

JH:. . . that if it’s going to threaten us all, then perhaps we should?

CU: Well, I think it’s, I think what we should be doing and our government should be doing is working together with our European partners to ensure there is a resolution to this situation. I mean, one of the things I've been quite struck by John is often how the Prime Minister has famously put himself forward if you like as the heir to Blair, but if you actually look at what his predecessor’s done in this situation, you remember Gordon Brown was ridiculed for globetrotting around the world to ensure that we brought leaders together to get a resolution to the last financial crisis we had in April 2009. Barrack Obama wasn't even actually supposed to be attending that summit, he brought them together, we got a resolution to it. So instead of seeing the kind of posturing we are seeing from the Prime Minister, talking about the prospect of a financial transactions tax, which is not even on the agenda, we need to see some grown-up statesmanship to actually bring together different world leaders to resolve this issue. That is what the British public expects

May 21 bulletins: These said that David Cameron had urged leaders of the eurozone not to let uncertainty about the euro drag on, and suggested the Greek election would in effect be a referendum on the euro. It was also noted that deputy prime minister Nick Clegg had accused eurozone leaders of political paralysis. Norman Smith added that the apparent drift and delay among eurozone leaders in reaching agreement was beginning to cause unease in the government. Later bulletins carried an extract from the Ed Balls interview at 7.35am in which he attacked David Cameron for supporting Germany.

May 21 business news 6.15am: Simon Jack asked David Cumming of Standard Life if an audit of Spain’s books would lead to ‘nasty surprises’ about exposure to bank debt. Mr Cumming said the key issue the market was focusing on was whether Germany had the political will to support the euro, Spain was irrelevant to this.

Simon Jack also noted that since 2009, €16bn had been taken out of Greek banks and placed abroad. Europe business correspondent Nigel Cassidy reported from Greece on the problem. Simon Sole, a risk analyst, said international firms emptied their accounts nightly and families were also leading the flight, some of them by flat-hunting in London. He said estate agents had observed that Greeks were ‘flocking’ to London. John Grout, from the Association of Corporate Treasurers, said that guidance had been issued for businesses trading with Greece about what to do. He said that unless the ECB helped, the banks would all be weakened.

May 21 7.35am: Sarah Montague said that David Cameron had warned voters in Greece could either vote to stay in the euro – by accepting the commitments that had been made - or leave. Ed Balls said:

I think first of all the eurozone crisis is now incredibly serious for Britain and the eurozone and the world, and what happens in Greece in the next few weeks is important, because without proper firewalls in place, a proper European Central Bank had a different approach on jobs and growth, that this vote will really matter. But I do think the Prime Minister in the last week has been all over the place. He was saying a week ago maybe the euro would break up. Then he was saying at the weekend, it's essential Greece stays in, now he's saying that the vote is make or break. And this isn't about rhetoric or thumping the table should be about actually having a plan. Our problem is we had another leaders’ summit this weekend which didn't come out with a plan, Germany wasn't confronted, and Germany has not said, we now recognise we need the central bank to act, a different approach on austerity than what we've seen in the last year, and I'm afraid the problem is David Cameron, for the last two years, has been supporting the German position, which is now an increasingly isolated position, a very different position from Obama-Hollande view, that we need a more balanced plan on austerity, medium-term tough decisions, but a plan now on jobs and growth. Unless there is a change in Germany, we aren’t going to see this crisis resolved, and I don't think David Cameron’s posturing today helps at all, I think it makes things worse.

SM: Is Germany's fault then, are you suggesting, for what is going wrong within Europe?

EB: Well, I think fundamentally, it's a political problem for the whole of the eurozone, but in particular Germany, because the German people were told in the mid-1990s that the single currency would require them to bailout Italy or Spain, it wouldn't require the central bank to have to act to support other governments, but that is fundamental to a single currency, especially in crisis situations. There's no point in us pretending we can remake the past, we are where we are and we must have action or else we'll all be affected If this vote goes the wrong way in Greece, and David Cameron’s saying, ‘whatever’, what does that say to people in Spain and Italy, particularly to the markets and investors as well? SM: I’m not following that, because you say if it goes the wrong way - is the wrong way voting for those anti-bailout parties?

EB: Well, my fear in Greece is that the Greece people (sic) are facing an economic plan, which has agreed and imposed from Northern Europe, with Britain’s support, which is neither economic sustainable or politically sustainable. And the only way through is to sit down and say, well what can actually be delivered in Greece, what tough decisions can be delivered realistically without depression and high unemployment? The trouble is, the two years we haven't had a discussion. That may be difficult now in Greece, I don't know the detail of the politics, to say, well listen, if Greek . . . If Greece votes to go out, so be it, when you haven't put in place a proper protections for Spain and Italy, that is incredibly dangerous. And I don't think you can posture about that, there isn't a plan in the eurozone to sort this out, that is what is so dangerous.

SM: Perhaps all this is neither here nor there, because what we seem to be seeing are, from the startling figures, what has happened bank deposits in Greece, since the start of 2010, they are . . . a third of the cash held in Greek banks has been removed from them. Now, so we seem to be in this slow motion bank run, which, all the evidence, is accelerating.

EB: But I think look, if Greece stays in the euro will leave the euro, is fundamentally, in its own terms, matter for the Greek people. I think Greece is better in the euro and better in the European Union, but that may now be very . . .

SM: (speaking over) But that’s a separate question. What I particularly asking you about this, people are taking their money, just on the basis of logic, people are taking their money out of Greek banks, and whatever political arguments about the euro, there's no reason why that wouldn't continue. What can Europe do about that?

EB: But that will continue while there is uncertainty about what's going to happen in Greece after the elections. My point you know Sarah is that, you know, Greece is a small country, it's got to sort out its issues, I think we should be supporting them more, there’ll have to be tough decisions, put Greece to one side, Spain and Italy are huge, our country, our companies, our banks are massively exposed them. There is no plan to stop contagion to Spain and Italy. If that happens, it is absolutely catastrophic to Britain, Europe and the world. And we've come out of the summit with no plan and Britain still supporting the Merkel view that we don't need a plan to sort this out. We're already in recession, our economy is already weak and we are now potentially going to have that as a second hit - it's terrible.

SM: You’ve accused David Cameron posturing, but there have been some comments from you, from Peter Mandelson, from various members of the Labour team, about whether there should be a referendum in or out, for Britain. Now, when one goes through all the various comments, one comes back to the conclusion that actually, your policy hasn't changed at all. And so it just looks like mischief-making, to destabilise the Conservatives. Aren’t you guilty of posturing?

EB: Well, look, right now, in the coming months, I don’t think a referendum in Britain about in or out of the euro (sic) is in any way the issue facing our country, or the eurozone.

SM: So your policy hasn’t changed?

EB: Well, because, erm, we aren’t . . .

SM: So why make the mischief?

EB: Because we aren’t advocating a referendum, that isn’t our position now. We want our prime minister and our chancellor to get a plan for growth and jobs here in Britain and to persuade eurozone countries to finally get their act together. The question I was asked was, ‘is this something you’d rule out, as a matter of principle?’ – well of course not, because you can’t have Europe run by elites, and excluding talking to populations and the public and people . . . Peter Mandelson has advocated, in due course, a referendum. I don’t think that’s the issue now, I don’t think Peter is advocating that as an issue now. So it’s not mischief-making, it’s saying that we will have to make sure that we make the argument for Britain as a member of the European Union, but frankly what’s happening at the moment is making that harder to win, and a British economy in recession . . . facing a eurozone crisis, with a prime minister who doesn’t seem to be able to lead..

May 21 business news 8.42am: Simon Jack said most markets were up in the eurozone.

May 22 bulletins: An item said that the European Commission had launched robot fish to check pollution levels.

May 22 8.10am: John Humphrys said the government was trying to get round European law by calling nuclear power ‘something else’ and subsidising it. Climate change minister Ed Davey was asked if this was the case. He replied that the aim was a policy that kept the lights on.

May 23 bulletins: Gavin Hewitt noted there was an informal meeting of European leaders where the focus would be on jobs and growth against a backdrop of a warning of a severe recession. He said new French premier Francoise Holland had succeeded in pushing this up the agenda and the ECB might advance measures to support business as well as consider Eurobonds. ‘The crisis of Greece’ would hang over the meeting with the message that they must accept the bailout terms. .

May 23 Business News: The item looked at the possibility of foreign investors pulling out to the ‘stricken eurozone countries’ de-euroisation’. George Grodski of Legal and General said there were lots of investors pulling out, especially those from the US – and many of these investors were pulling out of the EU altogether, even Germany. Simon Jack said that the Greek prime minister had told Newsnight that pulling out of the euro would spell disaster for his country. Mr Jack brought in Roger Bootle of Capital Economics, who said that the euro had been half baked since the beginning. He said the Greeks had lied to get in the eurozone but Eurobonds did not make sense because it would put unjust spending restrictions on national economies. Steven Saywell of BNP Paribas said Germany was not in favour of Eurobonds.

Simon Jack said that US trade ambassador Ron Kirk had visited the UK to try boost trade between the US and Europe. He said there was a need to further remove trade barriers. Stephen Saywell noted that Christine Lagarde had said that austerity was right for the British economy and warned that the eurozone crisis - ‘where the vast bulk of UK exports go’ – could lead to more restrictions if things got worse.

May 23, 6.34am: Chris Morris talked about the possible impact of Francois Holland on the EU. He said he would want to talk about the financial transactions tax ‘which David Cameron will have a few things to talk about’ . Mr Hollande ‘would rattle cages’.

May 23 7.09am Christine Lagarde of the IMF was interviewed by John Humphrys.. He suggested that Greece could leave the euro and contended the IMF must accept that prospect. Ms Lagarde said she strongly supported Greece being in the eurozone,

JH:(speaking over) So long as they don't have to pay the price for it.

CL: Yeah, there is an inconsistency between, you know, sending away those political groups that support belonging to the eurozone, and being sensible about it, which means implementing programmes, and by the same token say, we want to be part of the euro group and the eurozone, and have the euro was currency, but it has a price as you said.

JH: And if in the end the people of Greece are not prepared to pay that price, and the indications at the moment are that they are not, then will the eurozone as we now envisage it be able to survive, or is it inevitable that we will end up with a group of northern, powerful countries, and then a fringe outside the eurozone. And if so, could that be an economic or sound result?

CL: Well you said, if the Greek people do not want to pay the price, somebody has to pay the price. So it may well be that members of the eurozone will be prepared to support financially more, and maybe longer, for Greek . . .

JH:(speaking over) You’re asking Germany for an awful lot of money.

CL:. . . the Greek country and population to stay within the eurozone, because the members of the eurozone will consider the integrity of the zone as sufficiently beneficial, so as to justify additional investment. That's another option.

May 23 8.52am. Chris Morris, reporting from Brussels, talked to the Greek baseball team there. Also to Olli Rehn, the EU’s economic commissioner, who talked about the need for investment and jobs in Greece; and Sharon Bowles, of the European parliament economic affairs committee, who also said there was a need for investment.

May 24 bulletins: It was said that an EU summit had ended with a pledge to keep Greece in the euro and to promote economic growth. It was also reported that David Cameron had rejected a proposal from Francois Hollande for a Europe-wide financial transactions tax. Later bulletins said the Conservative Free Enterprise Group of MPs had urged the government to draw up contingency plans for if the euro failed. These should include freezing benefits, making small firms exempt from employment regulations and issuing infrastructure bonds to draw in international funds for UK capital projects.

Gavin Hewitt said in the 8am bulletin that no concrete plan had emerged to keep Greece from leaving the euro, and there had been clear disagreement about the French proposal to introduce Eurobonds, with the majority of countries supporting the idea but disagreement by Germany. Also at 8am, it was said that Nick Clegg would warn in a Berlin speech that Greece leaving would inflict irrevocable damage on the euro.

May 24 business news 6.15am: There was actuality from Herman von Rompuy and Jose Manuel Barroso praising the steps made at the summit. Christian Schultz, senior economist at Berenberg Bank, said that there had been agreement on project bonds and these were limited Eurobonds that could be issued without the approval of Germany. But he said that full blooded Eurobonds were unlikely to be approved or introduced before the next EU summit in June. He added that the other message of the summit was to persuade Greece to both stay in the euro and stick to the austerity terms. He said it was unlikely – despite support from many countries – that the EU financial transactions tax would be introduced, because the UK had a veto. Max King, the markets guest, said that the markets were not very happy with the summit because they wanted decisive action. He asserted:

Well markets want a resolution, they're sort of fed up with the constant fudging, they want a resolution either as a full fiscal and monetary union, or an unravelling of the eurozone. And either of those resolutions are fine. What they don't want is a continuation of the endless stopgaps and fudges and pretences, which the eurozone have excelled at for the last few years.

He added that many investors saw an unravelling of the eurozone would be bullish in the medium to longer term.

May 24 6.32am: Stephen Evans said the summit had been distinguished by the divisions between France and German over issues such as Eurobonds and between France and the UK over the financial transactions tax. He said the message about Greece was that they wanted it to stay, but a departure would be manageable. He noted that the tone in Germany against further help to Greece was hardening.

May 24 7.12am: Gavin Hewitt said the main outcome of the summit was pledges to keep Greece in but no new strategy to prevent its departure. He added that behind the scenes, contingency plans were being made for an exit, but it was also feared that if too many plans were made, this could itself trigger the departure.

May 24 8.10am: Chris Morris reported from the summit., he said that although the hope was that Greece would not leave, contingency plans were being drawn up. Part of the offer to Greece was to mobilise EU development funds to encourage growth and job creation. He said that Angela Merkel had claimed that the differences were not as big as suggested; austerity and growth were ‘two sides of the same coin’. He reported that David Cameron had attacked the idea of a financial transactions tax, while Francois Hollande had pushed strongly the need for Eurobonds.

Linda Yueh, of Bloomberg, said that Greece leaving would affect the UK because so much trade was with France and Germany. She agreed that a danger was a run on the banks Stefanie Bolzen of Die Welt said no real measures had emerged from the summit because the purpose had been to put pressure on Greece not to leave. Ms Yueh said that an exit by Greece could be ‘disorderly’. She stated:

The sequence would go something like this: if Greece were to leave eurozone they would adopt their own currency, you know, probably called the new drachma, and it would be a much cheaper currency, so that means that anybody who does business with Greece, whether you are a business, a private business, a bank, you now realise you'll be, er, you may not be paid, and that would cause you to stop doing business, all your money out of Greece, you don't want your euros become the week drachma overnight. That's where you get the bank runs, the deposit outflows, once that happens then that becomes extremely disorderly, and it would be a very severe short-term negative shock. Now, what's unclear is what happens over the medium-term, because it's . . . Greece is still in a position where even if it left the eurozone it would still have to undertake very hard structural reforms, because it does have serious economic issues to deal with . . .

Ms Bolzen agreed that the danger was then what would happen to Spain and Italy. Ms Yiueh repeated her warning that the exit of Greece would hit the UK.

May 24 business update 8.51am: Jim O’Neill, chairman of Goldman Sachs Asset Management, said nothing much had been announced at the summit but there had been an effort to inform Greece about the choices it was making. Simon Jack said: It’s been described, the euro project was described at the meeting as a house which is half built, and rather than Terry down, why don't we finish it? What does that mean? Does it mean that this talk about Eurobonds, mutually underwritten bonds, still seems to be some way off, what would it take to get there?

JO: Well I think it needs leadership. From my 40,000 feet, in many ways the whole thing has been made so much worse by the lack of leadership. The euro area doesn’t have a balance of payments crisis, you know, they all want . . . one part has a lot of surpluses, the others have lots of deficits, the average fiscal deficit and debt position is actually less severe than ours, it’s better than the US, and yet they have this awful crisis. It’s basically a crisis about the structure and leadership of the concept, so to solve it they need to do some big things, which are actually, in principle, relatively simple, they’ve just got to decide to do them. Eurobonds are one of them. I can understand why the Germans don’t want to declare it now, but they could make some kind of forward commitment to it. They could all agree to represent themselves in G7, G8, G20 meetings just as one instead of all the individual countries, and right now, the one of them that is particularly important, and critical in the next few weeks is they somehow need to use this European Stability Fund to inject capital into banks, rather than just supporting, indirectly, banks buying more sovereign debt.

May 25 business news 6.15am: it was noted that the European slowdown in the economy was affecting exports to China.

May 25 6.39am: Tom Burridge said the ‘huge’ Spanish bank Bankia was seeking up to €15bn in help, and if that came from the government it would make them the majority shareholder. He added that there was no sign of a run on the banks.

May 25 8.10am: Nicola Sturgeon, of SNP, said that Scotland leaving the UK and retaining the pound would be different from Greece’s relationship to the eurozone because Scottish levels of productivity were the same as those in England.

May 25 8.51am: Former Tony Blair advisor Jonathan Powell spoke about the growing number of government summits and doubted their effectiveness.

May 26 bulletins: Christine Lagarde, the head of the IMF, had told Greek citizens that they could get out of their economic crisis by paying their taxes. Nigel Cassidy said the remarks came against a background in which many Greeks were considering voting for parties who wanted to alter the EU bailout terms. He said that Ms Lagarde had also said she had more sympathy for children in African schools who were facing hardships than for the Greeks.

Tom Burridge reported that Spain’s fourth largest bank, Bankia, was holding talks with the government about a loan of up to €19bn. He noted that the government already had injected four billion euros into the bank and in consequence controlled 90% of it.

Robin Brant said that the Home Office was drawing up contingency plans for an influx of Greek immigrants if the country exited the euro.

In the 8am bulletin, Rory Cellan-Jones said that it was deadline day for British websites to comply with European rules on tracking consumer behaviour online through cookies. It was noted that fines of up to £0.5m could be imposed for non-compliance.

May 26 7.12am: Sarah Montague said: The Home Secretary has confirmed that the government is looking at ways of how it might stop lots of people trying to move to Britain if the euro collapses. Naomi Grimley is our political correspondent and Naomi, there's free movement within the EU, what is it that the government can do if the euro collapses and there's a sudden sort of flood of people wanting to move here?

NAOMI GRIMLEY: Well, that's a good question. And, as you say, it's a founding principle of the single market that you have this free movement of labour and goods, but there is a kind of caveat to that, it is allowed in exceptional circumstances to bring in some controls, for example, Britain has controls when it comes to Rumanian and Bulgarian immigrants, so that's one example, another is France, for example, last year tried to introduce new passport controls between France and Italy when the Arab spring was going on. So, in exceptional circumstances it might be allowed, but nevertheless, it would be a huge departure if she did it and it gives you a sense of how much of a wild card the eurozone crisis is viewed as in government.

SM: Is there any evidence that as yet there is a pickup in the number of people trying to come to the UK as a result of the lack of jobs elsewhere in Europe?

NG: No, and Theresa May was very cursory in her remarks, but she makes it clear that they're looking at trends but, no, there is no evidence of an immigration spike at the moment. I suppose they're trying to cover themselves on all fronts when it comes to this eurozone crisis. Contingency planning going on across government, and I suppose they're just looking at the logic that if you might have people moving their capital out of countries from one country, say Greece, to another, well, then people themselves might choose to move from one country to the other. But so far there is no evidence other than, of course, the anecdotal stuff we've all seen in the papers about Greeks buying property in central London.

May 26 7.19am: A computer expert was interviewed about the new EU rules about the use of cookies. She said the new directive would ‘hopefully’ allow people to understand how their data was being used and put them in control.

May 26 7.44am: Christopher Pissarides, Professor of economics at the LSE, said that the reason for Greece’s problems was not failure to pay taxes – as Christine Lagarde had alleged – but decades-old endemic corruption. Sarah Montague asked if it would be easier - as Angela Merkel had suggested – to start selling more state assets. Mr Pissarides said that key assets were undervalued because of the financial crisis, so the price would be too low. He said the first stage of change should be reform and then ;patience because they would take time.

May 28 business news 6.15am: Simon Jack, noting a European Commission review of women in the boardroom asked Baroness Prosser of the Equality Commission, what steps could be introduced to secure the promotion of more women.

Mr Jack asked, George Godber, fund manager at Matterley Asset Management, where the money to help Spanish bank Bankia would come from. He said that the government was likely to issue bonds and then go to the ECB to act as collateral. Mr Godber noted that Christine Lagarde had been forced to retract some of her remarks about Greece. Mr Jack also noted that there had been a crash in the price of olive oil.

John Cridland of the CBI said that the UK government should act to get rid of the EU Solvency II laws so that pension funds would starts investing in infrastructure projects again.

May 29 business news 6.15am: Simon Jack, noting that bond yields in Spain had risen to 6.5%, said this could lead to further ECB intervention. He noted that the Spanish prime minister had said there was no alternative but to put more government money into failing banks. A Spanish economist said the prime minister had managed to undermine further the lack of confidence of market traders, but he discounted the idea of a major run on banks. Jane Foley of Rabobank noted that the EU was now playing hardball because the Greek elections were pending and they wanted to make sure there was not a vote to leave the eurozone. She warned, however, that was happening in Spain was enough to undermine ‘the whole coherence of the EMU’.

May 29 7.18am: Business news update looked at the possibility that shares in banknote printer De La Rue were ‘overcooked’ – up 10% - because of speculation about whether Greece would need new notes printing.

May 29 7.34am: the item noted that the government was about to make two budget ‘u-turns’ about the pasty tax. John Humphrys said that the world was ‘in chaos’ and our nearest neighbours were ‘in huge economic crisis’ over the euro, and ‘here we are going about pasty taxes’.

May 29 8.10am: John Humphrys said:

A political question for you, you're in a mess, I mean you, the coalition is in a mess at the moment, isn't it, for all sorts of reasons, some of your colleagues are suggesting that a referendum on European Union membership would be (sighs), they wouldn't use the word distraction, obviously, but it could help them, couldn't it? Because it would be enormously popular if you were suddenly to say, right, we'll have a referendum on the EU?

KENNETH CLARKE: it's a complete non sequitur. Firstly I've seen mid-term, much greater turmoil than this, I've been in government in a much more, I mean, much more trouble than this. And actually, I'm amazed that the government is retaining the support it is, at a time of such financial stringency.

JH: (speaking over) What, considering the mess you're making you mean?

KC: No, no, no, no, because . . .

JH: (laughter in voice) This isn’t another Ken Clarke admission, is it?

KC: There, there, there’s not a government in Western Europe who could win an election at the moment, because you do . . . strong governments have to do unpopular things, and I think it's a credit to the public, actually . . .

JH: Well . . .

KC: Who realise that we have to do unpopular things. Now a referendum, a referendum on Europe .

JH: (speaking over) And then roll back from them when they've done them like the budget.

KC: (speaking over) The idea, the idea that because we're having a sort of a rough old time, which, as I say, in all the governments I've served in, and I can remember some rougher than this, the idea that you turn to a total irrelevance, a referendum . . .

JH: (speaking over) Ah, it's not an irrelevance, is it? KC: . . .And our membership of the European . . . it’s only . . . it is an irrelevance, or you create turmoil are great subject, at the moment we're holding confidence in the markets, to throw absolute confusion . . .

JH: (interrupting) At the moment.

KC:. . . over our continued involvement in the European Union. I cannot think of anything sillier to do than to hold a referendum. I'm not keen on referendums, I see no case of this referendum. I've taken part in a referendum on our membership of the European Union, and we won it easily, the pro- Europeans, and the anti-Europeans . . .

JH: (laughs, interrupting) It was an awfully long time ago, and it wasn't the same institution then . . .

KC: (speaking over) Yes, but . . . the point, the point I'm trying to make is the anti-Europeans ignored the result immediately. Mr Tony Benn who succeeded in getting this referendum ignored the result the day after it was announced. It would settle nothing, particularly would settle nothing with the more frenzied Eurosceptics who keep believing that European bogies are under the bed . . .

JH: Ah, well . . .

KC: . . . any time we get into any problem.

JH: Yeah, but it's not just frenzied Eurosceptics who believe in bogies under the bed is it? The nation is . . . if you are to believe the polls at all, and they're pretty accurate these days, the nation is, not just the outer reaches of your own party, but the nation is deeply Eurosceptic now, isn't it?

KC: I think . . . The nation's a bit Eurosceptic. The nation, I think the nation is extremely worried about present events as well you might be, we all feel insecure, we all feel worried, we're hoping that strong government can take us through and some difficult measures are required. If you asked the public what are their big priorities at this difficult time, what would they like to see us turn our attention to for three weeks and campaign about, the idea that they’re all demanding a referendum on the European Union would be regarded as ridiculous, it’d be out of sight as a public demand, a public priority

.JH: Alright . . .

KC: It’s the demand of a few right-wing journalists and a few extreme nationalist politicians.

Moves on to discuss the front page of the Guardian which shows him in repose.

May 29 8.46am: Steve Evans reported from Germany on the peg that attitudes towards Greece were hardening there. He included vox pops to that effect. A spokesman for the Tax Payers’ Association said it was wrong to blame Germany for Greece’s trade surplus because no-one was forced to buy German goods and services. MP Joachim Spatz said that Greece had the choice to stay in the euro and should take the package that had been offered. It was noted that there was a magazine article which suggested that Germany’s generosity stemmed from guilt over Auschwitz.

May 30 bulletins: These said that the transport select committee of the House of Commons had warned that new EU rules about pilots’ flying hours could compromise safety.

May 30 6.15am: In business news, hinged on the European Commission’s annual economic policy recommendations, Joachim Bitterlich, former economic advisor to Helmut Kohl, said that it was vital if all European countries had the same tax regimes, and the EU had failed to harmonise budgetary and fiscal policy in the 1990s with dire consequences. Simon Jack said that no-one had benefitted more from deregulation of the markets than Germany because had kept its economy competitive by keeping the value of the mark down. He said:

…it's clear, Germany has been perhaps more profiting from euro than others, but imagine for one second Europe without the euro. Look back into the 90s and we had a competition or a race from one re-evaluation, to another devaluation of currencies. We were always, let’s say, in difficult times in the 90s. And the Germans would have to re-evaluate the Deutschmark many times in the first 10 years of this new century, and therefore reduce the competitiveness of the German economy. In my eyes, it clear we have to try to help other countries who are more in difficulties to get the right reforms on. This applies to France, this applies to Spain and to others.

Simon Jack then asked Julian Chillingworth of Rathbone Unit Trust about the ECB’s rejection of Spanish bank Bankia’s request to issue debt straight from the bank and get cash for it from the ECB. He said the ECB was worried that such steps would rapidly move out of control. The result was that Spain would have to return to the bond markets.

May 30 6.34am: Andy Martin said that many people in Ireland did not understand the referendum. This was because the fiscal treaty was ‘intensely complicated’.

He said the ‘very, very strong’ left-wing lobby was campaigning for a ‘no’, but everyone else wanted ‘yes’ because they believed that Ireland would need a second bailout and voting ‘no’ would preclude that. He noted that the polls indicated a strong ‘yes’ vote and only 12 out of 17 countries needed .to vote for the treaty for it to take effect. He concluded:

I think people are disgruntled, I think that things in Ireland are getting very, very bad. I think things are really starting to bite, the cost of living is phenomenal at the moment. I think that there could be a narrowing between the yes and the no votes, crunch time tomorrow morning

May 30 7.09am: Chris Morris reported from Ireland on the eve of its referendum on the EU fiscal treaty. He noted:

Ireland has often been portrayed as the shining example of austerity in Europe actually working. So, is that how it feels here?

He first included actuality from Taoiseach Enda Kenny who said the treaty’s aim of good housekeeping was in everyone’s interest. He added that austerity was part of the equation, but also a strategy for growth. He said:

Austerity never works on its own, it made that point perfectly clear. That's why for the last six months we've been talking about growth and investment. And I'm glad to see that the European Council are focusing on that now.

Mr Morris then spoke to a group of ‘no’ campaigners who said that austerity had failed to turn Ireland round. He included a clip from ‘left-wing’ MP who claimed the cuts had hit the poor, including disability allowances and social welfare. Academic Gavin Barrett said that austerity had gone down better in Ireland than in countries like Greece, although there was a degree of resentment. Mr Morris said that ‘much anger’ was generated by the fact that banks had gambled and failed. Author Jon Walters said people were in a kind of limbo and emigration had started again. Mr Morris said:

It’s a genuine concern, because even though new jobs have been created in the export sector, the downturn means that more jobs have been lost elsewhere. And that’s the thing about austerity in Ireland – after several years of tax rises and spending cuts, it remains an experiment with unpredictable consequences, and after taking all the pain, there is now the added fear that dramatic events in Greece or Spain or wherever could derail the best laid plans.

May 30 7.13am: Niall Ferguson, interviewed by Evan Davis, said that claims by Paul Krugman that austerity was bad for the UK were not supported because Britain was doing a lot better than many other EU economies.

May 30 Thought for the Day: This noted that olive oil prices had hit a record low and the EU was ‘intervening’ to save jobs in Spain.

May 30 8.17am: Nobel economist Paul Krugman said:

The eurozone has the additional problem of having a single currency without a single government. And that means, that you know, what advice do I give to the prime minister of a small eurozone country? Not easy. In fact, I have done that, and they have only two choices, which is the nuclear option of leaving the euro or, you know, doing whatever will keep the Germans willing to keep lending money. But for the eurozone as a whole, a terrible mistake, they need higher inflation, they need, they need more aggregate demand.

Evan Davis asked:

What would you do if you were voting in the Irish referendum tomorrow, they're voting on this new fiscal treaty, the rather tough, Germanic fiscal treaty.

PK: Yeah, I, I’ve thought about it, it's hard. I would say vote no, because yes, if you think oh, this will anger the Germans and they'll kick us out and cut us off, I don't think so, I don't think at this point the Germans need to face the reality that this cannot work and they, and, and if the Irish who've been such good soldiers in this crisis, if even the Irish say no, that would actually send a helpful message

May 31 bulletins: These noted that Ireland would vote in a referendum on the new EU fiscal treaty, the only country of 25 to do so. It was noted the treaty would come into effect if it was ratified by 12 of the 17 members of the eurozone. Mark Simpson said in the 8am version:

Today's referendum is the ninth time Irish people have been asked to vote on European issue. History shows the results are notoriously difficult to predict. The latest referendum concerns the recently negotiated European fiscal pact, which imposes strict new budget rules. Supporters of the treaty and argued it will help to bring stability to the eurozone. Opponents have claimed it will condemn countries like Ireland to endless austerity. Voting is today, counties tomorrow, the result in Dublin will be watched with interest in Brussels and across Europe.

May 31 6.12am: Mark Simpson said that Irish bookmakers believed a ‘yes’ vote in the referendum was ‘a dead cert’, based largely on opinion polls which showed a 60-40 result. He added that prime minister Enda Kenny was nonetheless nervous because there was a lot of anger about austerity. Mr Simpson noted that his voting pitch was based on that if Ireland voted ‘no’ it would mean further bailout funds would not be available.

May 31 6.15am: Simon Jack said that the word ‘Spalida’ (a portmanteau of ‘Spain’ and ‘Salida’ – the Spanish word for ‘exit’) was being used to denote Spain leaving the euro. Richard Dunbar of Scottish Widows said that bonds in Spain had a horrible day because it had ‘an overleveraged government sector and the sort of very weak bank sector’. He said Spain could not get a grip on how much money they would need for their banks and there was no idea where that money would come from. One bank needed €19bn, double what was thought a few weeks ago. He added:

We heard the head of the Commission, Jose Manuel Barroso, saying that flexibility and speed are of the essence, he said yesterday, which would be a first time for everything in this situation. But I think the politicians do need to decide what they want from the European Union. I think the ECB, the European Central Bank is acting reasonably quickly. They're talking about centralised supervision of euro area banks, and the euro wide deposit scheme. This is sensible, this is what the markets are looking for, but it has obvious political indications, and I think the politicians really need to decide what they want from eurozone.

May 31 6.43am: Sarah Montague, noting that the EU had issued a strong condemnation of Israeli policy to the West Bank, on the ground that it would make a two-state solution impossible, said that the concern was the number of Palestinian homes being demolished.

May 31 7.35am: James Naughtie said the withdrawal of investments in bonds in countries such as Italy and Spain was continuing as it became evident that Spain would need further help. Robert Peston said that it had emerged that Bankia, Spain’s biggest bank, needed an extra €23.5bn and this mean that a further €80bn was needed in Spain as a whole. He said that those who control the billions of spare capital round the world were taking the view that there was a genuine risk of the eurozone falling apart and were taking their money from areas they saw as risky. Mr Naughtie then spoke to Megan Greene, eurozone economist at Roubini Global Economics about the European Commission’s proposal to now introduce ‘full banking union’ across the eurozone. Mr Naughtie said: ,

…i.e. something that would, you know, take another step to kind of, you know, fiscal probity, and they are going to discuss it at the June summit

Ms Greene said:

Well, an EU-wide banking union actually would be akin to fiscal union for the Eurozone through the backdoor.

JN: Hmm.

MG: Or by stealth, so it would be a big step, but I don't think it is politically feasible, because part of that union would have to be an EU wide bank deposit guarantee scheme, and I don't think it credible that you could set one up. Germany wouldn't agree to it, but its constitutional court in particular would find it illegal, if it were unlimited, and if it were limited then anyone with any money above that threshold would rush to take it out, so it would exacerbate any bank run that they were trying to stem with it. JN: So it's a nonstarter in your view?

MG: Yeah, absolutely, I don't think there's any way they can agree it, especially not by June.

Mr Naughtie said disaster seemed round the corner. Ms Green said she did not think Greece would exit, but if they did, Spain would need a bailout within a week. And the money just was not there, so all sides had an interest in postponing a Greek exit. Robert Peston said:

I think that is right, that most bankers are now discounting a Greek exit, maybe not that soon and Megan Greene may well be right about that, but, you know, more or less all the businesses, bankers and I have to say, you know, senior members of the government are assuming that Greece will leave the euro, and the big question is whether or not enough contingency measures have been put in place to prevent really serious risk of that creating a domino effect of collapsing banks and potentially, you know, real term or for other eurozone economies. And the problem is, we don't have a contingency measures in place yet because, in very simple terms, Germany is not yet prepared to commit the sums of money that are required.

May 31 8.36am: George Magnus, of UBS, said the continuing tensions of the eurozone were leading to ‘deposit flight’ from the whole of southern Europe and the money was finding its way to Germany and the UK. He warned that the whole of the European banking structure was in jeopardy. He added that the ECB would soon be under pressure to make further loans on the same lines that it had advanced €1 trillion between December and February.

May 31 8.55am: Fine Gael MP Paschal Donohoe said the Irish referendum said that although a ‘yes’ vote was predicted, there were still voters who were undecided. Declan Ganley of Libertas said there should be a ‘no’ vote because Ireland should not have to give up further fiscal sovereignty. He said:

We don't need to give up more fiscal sovereignty to prove that we can be the good boys in the class, and manage our deficits properly. We were doing that, we were running surpluses here, up until such time as we socialised failed private bank risk and bailout the investors in private banks from across Europe, from Germany, France, from the UK and elsewhere, who were facing losses, had in fact put themselves in a situation where they were in a risk loss situation, and then passed on those losses to the Irish taxpayer. We bailed them out. Now, that means that we are carrying huge proportion of our national debt on our balance sheet, debt that we never borrowed in the first place. It's socialised bank risk. Now, we need to get rid of this, and this treated as nothing to address that problem, and it's a problem not just for us, but insolvency is a problem right across the European Union, and we can, we have to face up to it and deal with it.

Mr Donohoe said:

The reason we believe this treaty will help us continue this work is firstly it will make it very clear to people who want to invest in Ireland, both international and domestic investors, as Ireland is completely committed to dealing with the difficulties in our national finances . . .

JN: (interrupting) And you think investment would suffer if there were no vote?

PD: Yes, because investors at home and abroad that are looking at investing in Ireland. One of the main attractions are doing so is that we’re inside the eurozone, that we’re making progress in dealing with the difficulties in our national finances, and a yes vote reaffirms our commitment to doing this, and also provides a system of emergency funding, if we need it again in the future. JN: Very briefly, Declan Ganley, very briefly if you can, why do you believe that investment will suffer if there is no vote?

DG: Well, business knows that you don't solve debt by adding more debt, and the purging of this bank debt that doesn't belong to Ireland of our balance sheets, is going to make us even more attractive. A lot of what Paschal says there is 100% correct, Ireland is highly competitive, we are making all the adjustments need to be made, we just only to give a more sovereignty to do that.

June 1 6.50am: James Naughtie said the talk had shifted away from trying to keep the eurozone together ‘almost no matter what’: not there was mention of ‘disintegration’ if ‘Greece and others begin to fall off the edge of the world’. Tom Burridge, reporting from Spain, spoke to an English shopkeeper who was closing her shop down as part of what she said was the pressure on small businesses. A bar owner said it was increasingly difficult to make a living. Juan Ignacio Crespo, a financial analyst, and author of The Next Two Recessions, said he believed the economic outlook for Spain was not as bad as it was sometimes currently portrayed.

June 1 7.12am: Stephanie Flanders said that the boss of European Central Bank, Mario Draghi had ruled out helping Spanish banks directly and Germany was also reluctant to do so, preferring instead to channel aid via the government. She said that for their part, the Spanish did not want to be encumbered with a bailout of the sort that Ireland had received.

June 1 8.16am: Justin Webb said that the Spanish government had been forced to provide €19bn for its most troubled bank, Bankia. Paul Mortimer-Lee, of BNP Paribas said that other banks were in trouble and Spain needed to go to the IMF. He added that the fear was that the troubles from the property market were much worse than was being admitted. He said the government had been trying to ‘bounce’ the ECB to provide funding for Bankia but this had been refused. He added:

…and clearly if it becomes a systemic threat, threat to the whole euro system, and particularly if we saw very high degrees of stress in the banking system, then the ECB would have to step in. But as yet, it seems to be a problem about sovereign government financing, not about the banking system, and the reason is that the ECB stuck a trillion euros of cash into the banking system over the last three months, and so the bank so far are not stressed. And so what is likely to happen, I think, is that the Spanish are increasingly against the wall, their bond yield’s going to continue to rise, and they will come under extraordinary pressure from other institutions, other governments. Italy's bond yields will be dragging up as well, along with Spain, they're going to come under a lot of pressure to actually get the cash and sort their banks out.

June 2 7.11am: It was mentioned that the European Commission had said it would not be intervening in the BSkyB consolidation of shares deal.

June 2 7.15am: Justin Webb spoke to Syriza spokesman Yiannis Burnoos about the party’s plans to cancel the bailout deal with the EU. He asked him how Greece could stay in the eurozone if this happened. Mr Burnoos said:

Well, this is a question that we have been asked repeatedly. First of all, your listeners should know that there is no official protection in any of the existing European treaties protecting the punishing (?) exit of a member state from eurozone. Secondly, we have to see, speaking generally, the change of the political, the radical change of the political atmosphere in many different European countries in the last weeks, the policy of the bailout, the policy of super austerity is being gradually isolated, after the result in Greece on 6 May, after the election of Mr Hollande in France, and the increase of the influence of the alternative left parties, in the Netherlands, in Ireland and in other countries.

Mr Webb asked how those countries who had provided financial support would square a Greek default with their own electorates. He replied:

Well, it depends on what you mean by saying that a nation that refuses to do its bit. There have been many profound European officials that have accepted and stated in the past weeks that the Greek people have sacrificed more than enough in the last three years, and that we should let them decide on their own, and protect their popular sovereignty. But in any case, if you see what's happening with Spain and Italy, I believe that the biggest anxiety of Mrs Merkel at the moment is to answer why the super austerity policy, the policy of the German government has led, through the present strict stability conditions in the European Union, has led Spain to have interest rate of 7%, and Italy to reach 6%. If these two countries in front of which the Greek public debt is like a drop in the ocean, decide that they will need the European Stability Mechanism, there is no stability mechanism that can hold and save Spain and Italy. So the question is, I've Europe continues with the bailout policies and the super austerity programmes, and the eurozone is dissolved eventually because of this neoliberal policy, or Europe decides to make a decisive turn at this moment, that Spain and Italy are also drowning, and we go for a European solution to the problems, including the debt problems.

June 2 8.10am: Robert Peston, discussing US unemployment figures, observed that the eurozone crisis had hit, for example, the performance of the UK manufacturing industry and the impression was spreading that the eurozone could implode. Justin Webb said:

… if there is to be a solution, even if it's not the complete solution to everyone's problems, it does start with European governments deciding to do one thing or another, either to let the euro go, I suppose, or to have full fiscal union.

RP: No, that is precisely right Justin, I mean, there is no doubt that the big thing that needs to be fixed is the eurozone, and there is no doubt also in my mind that investors have now come to the conclusion that there is no more scope for muddling through in the way that the eurozone has been doing. I mean, for me, the really scary thing, and it was a scary day yesterday that happened, was that the price that the supposedly safer economies - the UK, the US, even an economy like Denmark, and of course Germany as the perceived strongest economy within the eurozone - the price that those economies had to pay, have to pay to borrow fell to levels we've never seen in history. You know, in real terms, you know, these countries can borrow from nothing. Now, what that implies is two things: one is that investors expect an extended period of low growth, you know, deflation, of conditions that we’ve been struggling to get out of, and therefore the interest rates will remain low. But also, this is the bit that a scary, at the risk eurozone pickup has intensified because in the circumstances of the eurozone breakout, you don't put a penny of your money into the currencies of Spain or Portugal or Greece, where there could be a massive devaluation in a break up, and you put all of it into the currencies that are at least likely to hold their value or even possibly rise in those circumstances. So, investors are saying that the risk of a breakup has increased very significantly, and the problem is that those sorts of fears can become self-fulfilling, because as they pull their money - and we've seen the evidence of this, very worrying statistics -as they pull their money out of the weaker banks of the weaker economies, the costs of shoring up those banks increase, and they may increase levels where it becomes, where the cost becomes simply too great and there is no option but there to be a disintegration. So these are genuinely very worrying. JW: So, if you're looking to deadlines them, which we always are, and we always sort of motor through them, or have done for the last couple of years, but officer, the Greek election is going to be a big one? We had a spokesman for Syriza, the left-wing party who want to tear up the bailout deal earlier in the programme, and he was saying, quite plainly, he was saying you're absolutely going to stay in the euro, we are going to tear up the bailout if we get into power, but will have to stay in the euro because everyone will allow us to and he said there's been a change of mood around Europe, there’s a feeling that actually, shoring up the euro is the thing to do, and the idea that Greece could just be allowed to go is really for the birds.

RP: Look, it's impossible to know what will ultimately trigger either the kind of concerted action to save the euro, you know, or to let it fall apart. I mean, you know, when banks are losing deposits in the way they are, you can simply wake up one morning and discover there is such a big hole in such a big bank, that the choice confronting eurozone ministers is either to put in place a proper rescue programme for the eurozone banks, especially Spain, or to let the thing, or to let the thing go. And, that, that, although regulators stay close to this, as one regulator put it to me, you can't be 100% certain what is going to lead to that, you know, moment of, you know, that Lehman Brothers moment of potential cataclysm. Plainly, all eyes are on Greece, but simply you cannot, you know, we should not kid ourselves into the view that if the government is elected in Greece which says it wants to stay in the euro, everything in those circumstances is all right. You know, the eurozone still faces the decision that it always faced, which is whether to build a kind of federal structure, political union, the decision-making structure to run the eurozone as a single economy for tax borrowing and spending purposes, as the long-term potential solution to the crisis, or let the whole thing falls apart.

June 4 bulletins: It was noted that Vladimir Putin would hold talks with EU leaders. Iain Watson reported that the IPPR think-tank had called on the government to meet the EU-wide renewable energy targets.

June 4 business news 6.15am: Lesley Curwen said there were increasing worries about the finances of Cyprus, which it was feared had large exposure to Greek bank debt. Fiona Mullen of Sapienta said that a bailout looked inevitable. Justin Urquhart Stewart, from Seven Investment Management said the eurozone crisis appeared to be getting worse and the main issue was getting the euro disciplines to run properly.

It was also noted that credit insurers had stopped covering exports to Greece, but that Greek food growers were now trying to export directly to other European markets.

June 4 6.10am: Steve Rosenberg, previewing the Russia-EU talks, said that Russia was very frustrated by Brussels’s reluctance to scrap these restrictions for Russians travelling to Europe, and by EU energy regulations, to the extent that Mr Putin had lost faith with the EU and was building g his own equivalent.

June 5 bulletins: it was noted that Qantas had blamed the troubled European economy for a 90% slump in profits.

June 5 business news 6.15am: Lesley Curwen noted that Portugal was having to inject a further €6bn into its bank while Spain was gearing up for a bond auction amid continuing worries about Bankia. Jim Rogers of Quantum Fund said he thought Greece would opt to leave the euro because politicians always took the easy way out. He suggested it would then go back to the same sloppy old economy it had had since 1832. He added: …the debt today is higher than it was before they, quote, defaulted. No, no, the debt keeps going up, the spending is still in big deficit, that's not the fault. The banks are still solvent. Lesley, what you have to do is wipe out the banks and the bond holders, they’re the ones who have made the mistakes, why should innocent Dutch taxpayers have to pay for a bunch of Greeks to sit on the beach and drink Ouzo? It’s crazy.

LC: So, if you think that Greece is very likely to exit, do you think the euro project will survive that?

JR: Well, it can and it should. In the US we’ve had states go bankrupt, cities, counties go bankrupt, the US dollar survived, the United States of America survived, so it can. Will it? That’s another question, because no far nobody seems to be making plans to how to reorganise and start over. They’re all just trying to get through the next election.

June 5 6.37am: Evan Davis suggested that amid growing problems in the eurozone, there were signs towards more pooling of resources. Stephen Evans said the pull was towards pooling institutions. He said:

Certainly, the drive from Chancellor Merkel is some sort of pooling of, for example, the oversight of banks. But if you then push people who speak for the German government and say, does that mean some sort of communal shouldering of debt for example, that doesn't follow, so the German position is, get the institutions closer together, get a more integrated fiscal policy, for example, and then other things will follow. Get the institutions then the money may follow, but in terms of the short-term solving of very pointed and an increasingly pointed problem, to do with Greece in particular, but also the banks now, that doesn't seem to be emerging. Minds are clearly being concentrated.

ED: I mean, effectively, some of the governments, some of the eurozone countries are conceding that they will have to give up a lot of power over their budgets, if they are to get what they want out of Germany?

SE: I think they’re conceding it, and Germany is pushing in that direction. Germany is saying they will need to be a transfer of sovereignty, of authority to the centre, not to Berlin, they don't think that, and they certainly wouldn't say that even if they did, but there is a recognition, or rather there is a view that the way out of this crisis the long-term is to do with pooling sovereignty. Now, there are obvious difficulties with that, and the issue of where German sovereignty goes for example, and how that gets transferred from Berlin is simply not discussed in the public prints (?) in the more immediate problem that is being discussed increasingly is the banking or the pressure on the banks. And you mentioned the Portuguese banks, the Spanish banks obviously, and also Cyprus. And what Chancellor Merkel was talking about last night, she met Mr Barroso, and she was talking after that about a pan- European supervision of systemically important banks, in other words, they are moving towards, or thinking about, pan-European institutions and pan-European rules, but whether that then gets down to proper discussion about how those institutions would work and the pooling of money, that is not clear. Now, the other thing that's going to happen today is a conference call of G7 finance ministers, including Britain obviously. Normally, these things are not made public, this one is being made public, and that's because, I think, they want to crank up the urgency of the whole thing. There are various people within the G7, particularly Canada and the US, who are pointing at Europe and saying, you are not doing enough, the problem is there, and you are not solving it. So they're making these meetings very, very public.

June 5 8.35am: Jeremy Stretch of CIBC said a teleconference was being held between seven eurozone finance ministers in a bid to reassure the markets. He added: …with the hope that it might also provide some support in terms of a more pan-European approach to both banking regulation and perhaps also guaranteeing underlying bank deposits.

ED: Well, that's it, isn't it? I mean, essentially, the immediate thing is that everything has to be driven towards more pan-European doesn't it? If they're going to solve this, you either break it up or you, ultimately say, ‘it's all for one and one for all’, because there doesn't seem to be anything else that would persuade the markets that the bill can be paid in the southern periphery?

JS: That is true, there is this lack of perception of any middle ground as you say, so it is the case that we moved along this steady process of moving towards federalism effectively over the course of the last 10 years or so, as the life cycle of the euro has played out. We're now in a scenario which suggest that we either have to, you know, advance the process, and that does imply an increasing loss of national sovereignty, and I think that's going to be the important issue in relation to any particular European support for, for example, the Spanish banking system, because, of course, Germany would argue, and they are of course the ultimate banker for the majority of the eurozone funds, they would argue that everything comes with conditionality, so it comes with strings attached, and that ultimately implies the reduction of national sovereignty. So it is the case that that seems to be a degree of inevitability in the first part of the process, or alternatively it's, of course, the breakup scenario, and the ramifications of that are very hard to quantify, and of course, that's probably something that we're not in a position to countenance and the global economy is in such a fragile state.

June 6 bulletins: Simon Jack reported that the Spanish government had finally admitted its banks needed outside help and was hoping to raise up to €40bn. In the 7am bulletin, Gavin Hewitt said:

The European Commission sees today's announcement as a first step towards a banking union for the eurozone. It will propose new European powers for dealing with failing banks, and protecting taxpayers from the costs of rescuing them. But the immediate and growing crisis is Spain. It has admitted it can no longer raise money on the global markets. The Prime Minister, Mariano Rajoy, has said the country is in extreme difficulty and has appealed for European institutions help recapitalise its banks. What Spain is desperate to avoid is an International bailout like Greece, Ireland and Portugal had to accept. It is also reluctant to ask for a limited bailout just of its banks, because it is fearful of what conditions might be applied. What Madrid is pushing for is for its banks to be able to borrow directly from the eurozone’s main rescue fund. The Germans oppose that, they insist loans have to be made via governments.

June 6 business news 6.15am: Marie Diron of Ernst & Young said Spain’s admission about bank debts was to be welcomed and speculated that there would be negotiations over how the money was to be provided, whether it would be directly to the banks or via the government. Greg Zuckerman of the Wall Street Journal said there were concerns in America about the impact it would have on growth and recovery.

June 6 6.35am: Chris Morris said the Spanish would like to access money for their banks without a formal bailout. Evan Davis said:

…meanwhile, the European Commission looking ahead, plans that wouldn't take effect really until 2018, try to prevent these future crises. Well, one might say it's perhaps a bit premature to be worrying about those kinds of things while this crisis is still raging?

CM: We see this a lot during the last couple of years, trying to sort out things make sure things never happen again in the future, when the house is on fire right at the moment. I mean, taking one step back, the Commission says that in the three years to October 2011, it has had to approve state aid to struggling financial institutions, in other words, money from national governments to banks and other financial institutions of €4.5 trillion. Now, that's a vast amount of money, which has obviously done no good at all for the thorny issue of sovereign debt across the eurozone. So the plans being announced today are a) designed to move towards common European rules to enable authorities to intervene at a much earlier stage, if it appears that banks are heading into trouble, and b) they are trying to prevent the collapse of individual banks doing wider damage to the financial system, and to avoid any bailouts in which governments rather than creditors and shareholders have to show the huge financial burdens. As you say, I think part of the problem is this is quite a long-term plan, and what these proposals don't do is make the much bigger step some are calling for now, setting up a genuine pan-European banking supervisor, or challenge the idea that as a last resort it is still national authorities that are responsible for underwriting their own banking systems rather than some new European system.

June 6 7.09am: Gavin Hewitt explained the Spanish banking problems, and said the European Commission’s announcement of plans for banking ‘union’ was a first step towards a ‘magic bullet’ solution. He added they would be discuss at the next summit but would not help Spain because they would not come in until 2014 . James Naughtie said:

And, I mean, apart from anything else, there are many countries in the eurozone, which would simply not want to go as far as banking union, I mean they just don't want it, they don't believe in it, they wouldn't be in the eurozone if, you know, if they did. I mean, they understood it wouldn't go that far. You can argue it may be the necessary outcome to make it work, but they haven't bought it.

GH: And we always come back in these conversations to Germany. Angela Merkel has said, sure, I like the idea of there being greater European supervision of these banks, to the idea that there would be some kind of joint deposit guarantee scheme, all right recapitalisation fund, she senses that that would be an extra problem German taxpayers, so the idea that there is somehow going to be a banking union very quickly coming over the horizon to sort out the crisis immediately, I don't think that's going to happen.

June 6 7.51am: Professor Ngaire Woods, Dean of the Blavatnik School of Government at Oxford University, noted that in ‘a pattern that we keep seeing’ the European Commission had announced a long-term plan for the Europeanisation of the banking system. James Naughtie said:

I mean, do you think, in the long-term, that does make sense, because the question is, of course what is the structure that is going to be left to deal with?

NW: Well, in the long-term what the European Commission are proposing is a set of rules about resolution, it's only one small part of the solution fact. You know, the main thing is that banks have to have loss-absorbency, they have to have enough capital to prevent themselves going bust and prevent the public having to pay for them going bust.

JN: Because if you look at the amount which has had to be put in because of this crisis, in let's say the last year, it is extraordinary.

NW: The European Commission document today said that 37% of European Union’s GDP, it's an amount equivalent to 37% of the EU GDP has been spent in approved state aid measures since 2008. That's an extraordinary contribution, and that's why Spain is broke. Spain, like the government has exhausted itself on state aid measures to bail out its banking system, and now we see a Spain, where the government cannot raise financing to keep going about its business as usual, and its major bank desperately needs recapitalising.

JN: Let me bring in Stefaan de Rynck, who’s a spokesperson for Michel Barnier, the EU commissioner responsible for internal market and services. Good morning to you, thanks for joining us from our Brussels studio. The European Commission's idea for the future may be all very well, but we are faced with a situation today, aren't we, where Spain is broke?

STEFAAN DE RYNCK: We are faced with a serious situation today, but that doesn't dispense us from thinking about the future, and for developing a political vision also about the future. I mean, the lack of confidence in eurozone financing today is also related to the need to develop a political vision, in the absence of such political vision. And that's where the banking union discussion comes in. And our proposal today puts a key element on the table, as you just rightly said, that we have to stop taxpayers bailing out banks, and that's taxpayers do not have to pay for mistakes of bank managers.

JN: You put this in context, quite rightly of banking union as a kind of future idea. The problem is that there are – and surely this is beyond dispute – there are countries who went into the eurozone quite happily with an idea of the eurozone working at a level which was some way short of banking union, and there view on that hasn’t changed?

SDR: There is a need to develop the banking, there’s a need for short-term measures, there’s a need for long-term measures. Today’s proposal is about long-term measures, it’s about the bill for the losses of the banks to be carried by shareholders in the first place, but also by creditors. I mean, the problem that you referred to in your introduction about Spain, and Spain's vulnerabilities today is related to the property bubble that has burst, the responsible behaviour of banks in the past, and we need to root that out.

JN: No one would argue that that needs to be rooted out, and no one would argue that it is a long-term objective. The difficulty is that the landscape is changing before our eyes, the landscape on which these changes need to be made in the future is going to look very different before we see them.

SDR: Well, today, if you refer to the issue of Spain . . .

JN: Yes.

SDR: And the risks, I mean, obviously what we need to break if the risk that is in the financial sector that is carried over to public finances. I mean, that is a key issue for the future.

JN: But people listening will ask, what is the simple answer to the problem that Spain faces? It doesn't have enough money, and it says that credit markets are effectively closed to it, because of the guarantees which people who lend the money will demand, which are beyond it.

SDR: Well Spain today need to first of all make good diagnosis, and that's what the Spanish government is engaged in, and to have appointed some independent experts to put the real numbers on the table, because there are some doubts out there that have to be taken away on the real numbers. And then, very shortly, no doubt the Spanish government will have to come out with an identification of where restructuring in the banking sector is needed, and where recapitalisation is needed. That is no doubt something that can unfold over the coming weeks.

JN: Ngaire Woods pointed to this statistic, released by the Commission paper which says that in the past few years, a sum equivalent to 37% of the GDP of member states has been used for bank recapitalisation. You know, people do need to be economists to realise that can't go on?

SDR: Yes, it hasn’t been spent, as opposed to what was said . . . JN: No.

SDR: The majority of that money is for guarantees.

JN: Yes, indeed, but it's tied up for that purpose.

SDR: Yes.

JN: Potentially.

SDR: And that is, again, something that needs to be avoided in the future. Today, Dexia, and the Belgian and the French government has asked the Commission to actually increases guarantees. With today's proposal, we would need to prevent to get into such a situation, with today's proposal, we would give resolution authorities in the country's powers to intervene early, if that doesn't work to (word unclear, ‘bailing’?) shareholders and creditors in the first place.

June 6 business update 8.48am: Simon Jack suggested that the Spanish banks might be helped either directly of through the ECB stepping in some other way.

June 7 bulletins: It was noted that David Cameron would have talks with Angela Merkel in Berlin, with Mrs Merkel under pressure to drop her opposition to Eurobonds, ‘a financial device that would spread the burden of debt across all the countries using the euro’. Stephen Evans said there was now a chorus of pressure aimed at Mrs Merkel, but no sign of any change from strict budget discipline – an approach that was in any case supported by the British government. Gary O’Donoghue said at 7am that David Cameron had not put direct pressure on Germany but had also suggested that time was running out. It was also noted:

The Chancellor, George Osborne, has said that in order to deal with the eurozone debt crisis, money from the eurozone needs to be put into Spain's banks, so they can be recapitalised. He also told this programme there should be a greater harmonisation of fiscal and banking policies for the countries that use the euro, but Mr Osborne said that the UK would require safeguards for the single market if this happened

June 7 business news 6.15am: It was noted that Mervyn King, governor of the Bank of England, had said that the eurozone was tearing itself apart. Timothy Congdon, of IMR, said that worries about Spain were intensifying.

June 7 6.31am: Evan Davis noted that the Spanish banks needed support and asked Chris Morris whether there was flexibility in the German approach. He replied that Mrs Merkel had said all along that the whole eurozone economy needed to act more Like Germany before more common burdens were taken on through measures such as jointly-issued Eurobonds He said that Germany also had the problem of the Greek election to contend with but could still say things would have to be done her way. Evan Davis noted that David Cameron, having chatted with president Obama, was off to Berlin to persuade Mrs Merkel to ‘do something’. Norman Smith said Mr Cameron had deliberately lowered expectations and was aware that eurozone countries resented finger pointing from Britain. He added that Mr Merkel had proved herself a doughty negotiator and had to take note of her own electors, who did not want their money parcelled off to other countries. Mr Davis asked: Is the British government, Norman, trying to do two different things. It's arguing in Europe that there needs to be more flexibility, and in a way has sided with the anti-austerity nations in arguing that, and yet at home of course is very much the bastion of austerity as the route to salvation.

NS: Well, Mr Cameron would say not. He would say austerity and growth go hand-in-hand, but I think there is a sort of curious alliance, sort of odd-couple alliance going on between President Obama and David Cameron, both of whom clearly view Germany as the answer to the problem, but also, even more clearly, you German money as the answer to the problem, and spending some of it pretty quickly to reassure the markets. It does seem to me there is a tension there, because obviously that aligns . . . that argument is much more aligned with the sort of thing that Francois Hollande has been pushing for, but there is a greater paradox I think and that is that Mr Cameron and the chancellor find themselves in the curious position of almost arguing the Federalist case. Here you have two avowed, committed Eurosceptics, saying, actually, you know what we need, we need greater European integration, we need fiscal union, we need Eurobonds, an agenda, which, you know, five, ten years ago, you would only have heard from the most committed Euro-enthusiasts.

Evan Davis then asked Chris Morris how the Spanish bond auction would go. He replied:

The expectation seems to be that they will be able to borrow money, but it's not going to be cheap. And it will be another sign of the urgency that people like David Cameron are talking about. I think one of the other interesting things about Mrs Merkel is that it is an interesting time talking to, because a) I think it does have an effect when President Obama goes public, as he did at the G8, and has again this week. And she’s also, of course, lost the mooring of that often odd partnership she had with former President Sarkozy, and she's still finding their way in forming the right kind of relationship with Francois Hollande. Also, there are more voices in the eurozone now, in Italy and Spain questioning whether her cautious, step-by-step austerity-led strategy is actually right one. So straws in the wind suggest more pressure on her, but as we’ve discussed there was another female politician once, wasn’t there . . .

ED: Yes.

CM: Who said, ‘The lady’s not for turning.’ And . . .

ED: Indeed so.

CM: And there’s a similarity of style in some way.

ED: She’s inherited the mantle.

June 7 7.31am: Terry Smith of Tullett Prebon said there was a danger of a massive capital flight from Spanish banks if they were not considered safe, and if the government tried to rescue them, it became like two drunks propping each other up. Howard Davies said he would prefer if a Spanish rescue came in the form of direct aid to the Spanish banks from the European Stability mechanism (ESM).. He said the Germans did not want to do that because it could open the door to Eurobonds. Terry Smith agreed that this was the best route. Mr Davies said it was not unfair on Germany to be expected to do this because they had been great beneficiaries of the eurozone though massive exports to southern Europe. Mr Smith said if the ESM route was chosen, there would have to be ‘some sort’ of European regulation of banks, a single market of European banks. He added:

I think you could take it further, eurozone, I think, is not going to survive unless you accept that there is a single authority that does regulate banks and, if need be, recapitalise them, like you're asking now, and the single authority that issues bonds and is capable of raising taxation for those bonds, a genuine federal Europe, otherwise it just simply isn't going to survive I’m afraid. I mean, we've been told that this problem has been solved by politicians, officials, and indeed, commentators for most of the last years, clearly it hasn't….:And everything else is basically a Band-Aid or an Elastoplast. As the UK being outside it, I'm afraid, you know, we've had, getting the two decades of people who told us that we couldn't survive outside the eurozone, in any number of ways, not just banking, but other industries, they've been proved comprehensively wrong.

Mr Davies said:

I agree with Terry that we need a fiscal, federal union and some kind of banking union, and I take one slightly different view from him, but I rather regret the fact that we are going to be outside of it because I think in the long run that will be such a comfortable place to be. But I'm afraid that's the direction in which things are going.

June 7 8.10am: Evan Davis said:

The British are really spectators in the eurozone crisis, short of stumping up cash to pay the bills of the struggling states, we have few levers to pull to solve their problems. But the crisis has enormous potential to affect us. It can knock our economy off course by hurting exports. Bank bailouts may reshape the European financial services sector, affecting one of our biggest industries, and the crisis is set to create a new look European Union, leaving a big choice for the UK as to what part we play in it.

Mr Davis first asked George Osborne what he would do if he had full power over the eurozone. Mr Osborne said he would first solve the Spanish banking crisis by recapitalisation and then would hope that Greece would elect a government committed to euro membership and the steps necessary to stay in the euro. He added:

And then, I think you need to put in place, in pretty short order, things that are going to make the single currency work in the medium to long-term basis, and that includes a greater harmonisation or a greater integration of fiscal policies, of banking policies, all things single currencies like the pound and the dollar the UK and the US have as features of stable currencies.

Mr Davis asked if he favoured direct recapitalisation of the Spanish banks or would prefer lending to the Spanish state to do so. Mr Osborne said it was not British taxpayers’ money so he would respect what the eurozone thought was best, and when pushed further suggested it should be via the bailout mechanism. Mr Davis suggested that would require a European banking system. Mr Osborne replied:

Well, the banks have been one of the weak links in all of this, and actually the eurozone I think have tolerated weak, undercapitalised banks for too long, and part of running a single currency and following what I’ve called the remorseless logic of having a single currency, is that you have something more akin to a banking union than a financial union. So that, for example, Spanish depositors have confidence that they can leave their money in Spanish banks. So that, for example, there are common funds to recapitalise banks. So as, for example, as you say, in return for all of that there is tougher pan-eurozone supervision. Now those are all, obviously, quite significant steps . . .

Mr Davis echoed this. Mr Osborne said there was no question of the UK being part of a banking union,

…we chose not to join the euro precisely because of the loss of national sovereignty that would be involved, and the loss of flexibility to manage our banks the way we want to and manage our public finances in the way we want to, so we will not be part of a banking union. ED: Right, so we'll have a separate regulatory system to a common single market or a single regulatory system in the eurozone, very likely, does it worry you that then you're effectively having worked for a couple of decades now on creating a single financial services market, so-called, you're going to be a single market inside the eurozone and a different market in which our biggest industry, or one of our biggest industries operate outside of which in the UK?

GO: Well, it's clearly going to be a challenge developing, within a single market of 27 member states, of which Britain is one, a banking union of 17 eurozone members. They need to do that to make their currency work and it's massively in Britain's interest that the currency work, because an unstable euro has enormous damage to growth and jobs in Britain. I think Britain will require, if there is a full-blown banking union, certain safeguards. And, indeed, if you cast your mind back to last December and the European Council where David Cameron vetoed the fiscal compact that was put before us, if he was asking for safeguards on banking and financial services, I think we were ahead of the game there, we were identifying potential issue for the UK, which is do we want as Europe's largest financial centre to have a banking union on our doorstep without certain safeguards that ensures that the single market in financial services still operates at 27, and Britain has a big say on financial regulation as it affects all member states.

ED: Of course. But as they put out a fire in the Spanish banking system, they’re not going to want to spend a great deal of time arguing about particular British things that might affect us in a decade’s time, presumably . . .

GO: Well . . .

ED: And you’re not going to get in the way of a rescue of the Spanish banking system?

GO: Well, no, no, no, we’re not getting in the way at all of a rescue of the Spanish banking system, and we would want that to happen. But, if there are significant steps towards, for example, common depositor protection, so in other words, you know, in effect, German tax payers stand behind Spanish deposits or Greek bank deposits, if they want to do some things like that, the most ambitious end to that kind of activity requires treaty change, that would require Britain’s consent. As I say, we want the euro to work, it will require elements of a banking union, but there will have to be safeguards, there will have to be conditions to protect Britain’s most important industry, its largest private sector employer, and, by the way, Europe’s largest financial centre and, it’s, I think pretty important for Europe as a whole that our financial services are dealt with on the European continent rather than out of New York or Singapore or Hong Kong.

Mr Davis asked if he was optimistic that this would happen, and quickly. Mr Osborne said the problem had been identified and was being worked on, and the longer term changes needed putting in place. Mr Davis said this amounted to a Conservative Chancellor advocating more European integration:

… more European integration without us, but at the very least it is a paradox (laughter in voice) that Britain is now standing on the sidelines saying, ‘Go for it guys, just get your act together, fiscal union by Tuesday afternoon, banking union next week if you can do it,’ I mean, it’s just extraordinary, isn’t it?

GO: Well, I used the phrase last year, which is the remorseless logic. I think if you have a single currency it pushes you into a political, more of a political union, more of a budget union, more of a financial union, just as we’ve been discussing. And I think that is entirely consistent, actually, with what many Conservatives were arguing a decade ago, including myself, which was that joining the single currency was a very profound step for a country to take, and it involved a tremendous loss of national sovereignty. And I remember plenty of arguments at the time from a lot of people in Britain who wanted to join the euro, who said, ‘No, no, it’s a much smaller step than you’re making out’. So I think Conservatives and those who were against Britain joining the euro can take, you know, some satisfaction that we did foresee this problem. Of course, we can take no satisfaction from the fact that the failure to deal with the problem has caused enormous damage to the British economy and continues to do so.

ED: And of course, we don’t know whether the citizens of Europe want to make those moves. No one has asked them in a vote, ‘by the way, do you want to be part of a new country called ‘Europe’ . . . next week.’

GO: Well indeed, and one of the problem that Europe has is this so-called democratic deficit, where European integration and eurozone integration has taken place at a place which has not brought the people of Europe with it. Now that is, you know, that’s a challenge for those individual countries to take. I think people in Britain can have some confidence that a) we did not join the euro, b) that we’ve got no prospects of joining the euro and will not join the euro, c) that we are not going to join some banking union, British tax payers aren’t going to be standing behind Greek banks, and d) you know, we have passed this government, this coalition government led by David Cameron has passed into law a referendum lock that says if any government minister of any political party proposes a transfer of powers and sovereignty from the United Kingdom to the European Union, then there will have to be a referendum.

ED: (speaking over) You’ve mentioned the (word unclear due to speaking over)

GO: That is absolutely a . . .

ED: You’ve brought up . . .

GO:. . . a crucial safeguard that now exists.

ED:(laughs)

GO: When this law was passed very early on in the coalition government’s life, people I don’t think paid much attention to it. I can tell you, it’s probably one of the most significant things we’ve done over the last two years.

ED: Well, I mean, you’ve brought up the ‘r’ word, the ‘referendum’ word, I mean it’d be odd to have a referendum right now, because so much is changing in Europe, and the prospect of change is absolutely enormous, it’d be odd until the dust settles, presumably, to see where the cards lie to have a referendum, but what is going on there clearly reshapes Britain’s relationship with the EU, does it not?

GO: Well, I think what the public are concerned about, the British people are concerned about is if there would be any transfer of power and sovereignty, that’s what would really . . .

ED: (interrupting) Well . . . .

GO:. . . that, but that . . .

ED: But it just, it reshapes Europe, don’t at the end of it, when you know what the new structure of Europe is, don’t you think that would be a very good time to have some kind of referendum? Lord Owen proposes a couple of things in The Times this morning, we’ll be speaking to him later, it would be just the very obvious time to have a referendum and say, ‘Let’s sort out the new relationship with a newly designed Europe.’

GO: Well, a reshaped relationship with Europe would imply, would involve a transfer of sovereignty or powers . . .

ED: (speaking over) Well it may not, it may not. It may involve some back it . . . GO:. . . from the UK to Brussels.

ED:. . . it may involve some back.

GO: Well . . .

ED: When we know what the new Europe looks like, it would be a good time to just take stock.

GO: I think, I think we have a very clear safeguard in the system now, thanks to this government which is, if there is any transfer of power from this country, a transfer of competence from this country, a transfer of sovereignty from this country to the European Union, then there will be a referendum, that is not something that happened at the time of the Lisbon Treaty and the Constitution, that’s not something that happened at the time of the Maastricht Treaty. We have now put right that be ensuring in law there is this referendum lock. And as I say, people did not really notice the passage of this law about a year ago, but I think . . .

ED: (speaking over) You think it’s one of the most significant . . .

GO:. . . it’s one of the most significant things this government has done.

June 7 8.48am: James Naughtie said:

And to stay with the European theme, and picking up on what Steve was saying about Angela Merkel, because what is the best course for this country as the crisis unfolds and continues if the eurozone were to become tighter, for example, a proper fiscal union involving some countries, what kind of relationship would that leave us having with the EU as a whole. Well, Lord Owen, David Owen, the former Foreign Secretary has written a pamphlet, which I think at the moment is online, but is going to be published as well, in which he says that a referendum on that relationship now seems inevitable. His book is called ‘Europe Restructured’, and his withers, good morning. Erm . . .

LORD OWEN: It’s more than a pamphlet . . .

JN: Well, it’s a thick . . .

LO: It’s an e-book (laughs)

JN: Yes, I know, it’s an e-book and it’s going to come out . . . people can get it online, I think that’s right, and then they’re going to get the hard copy . . .

LO: Amazon, or Kindle you can get it.

JN: I know you’ve managed to send a copy to the Chancellor within the last half hour – that was a pretty smart move. Erm, why is a referendum, in your judgement, inevitable?

LO: I think the country feels cheated that they didn't have the promised referendum on the Lisbon Treaty, and I think as we watch more and more integration coming, greater and greater political fiscal and now banking union, the European Union is changing, and the British government now needs to lift its voice. We've been generous about making these changes to keep the eurozone successful and that's right, but we want to hear what they are going to do to safeguard the single market. We need a single market without a single government, that's the British position, and I think it's a good many other countries in Europe as well

.JN: You’ve always taken the position that you're pro-Europe, but you're not a federalist and that goes . . . LO: That’s right.

JN: That goes right back in your thinking. But what kind of Europe is it going to be, with which we have to define a new relationship?

LO: Well, I would like to see a single market include Turkey. I think it’s long been a disgrace that we have not accepted Turkey’s wish to be part of Europe, and I think keeping . . .

JN: (interrupting) With the Germans leading the opposition.

LO: Yes. But I think it would be possible for them to join the single market and we already have Norway and Iceland and Lichtenstein as part of a European Economic Area. But we can’t join that, that is just a hand-me-down from the EU. What we need is the EU, the three EEA countries, Croatia coming in next year to the EU, and Turkey. That would be 32 countries as a single market. It would retain all the acquis communitaire of the existing single market, it would have qualified majority voting, but the EU would not be able to dictate that, they’d be a very powerful voice in it, the eurozone.

JN: So, you would have a looser, wider group of countries which safeguarded the single market, because you believed that to be in our interests, and inside that there would be an inner core, probably with a fiscal union, and you see that coming, because it’s the only logical way that the eurozone in the end can develop, and for British people faced with a referendum, what would be the choice that they would be asked to make about their relationship with the two groups.

LO: Well, I think it would be two choices. The first would be: do you want to be part of a single market, which I think would be called the European Community. And I think we would very likely win that. And the second question would be: do you also want to stay in the EU waiting possibly at some future date to go into the eurozone. And I think that would be more hotly contested – personally I wouldn’t actually do that now.

JN: But the way you put it, you see, makes it sound as if the general view that a single market is a good thing for Britain and a broad kind of confederation of European states is something in our interests, you believe that that’s an embedded view. The trouble is that those who object to the EU as it is at the moment, forget the eurozone, the EU at the moment, in terms of its legal competence over us would still argue that that loss of sovereignty as they would put it would be embedded in that new wider grouping. In other words, it wouldn’t really be looser, it would just be bigger.

LO: Well, I think they would vote ‘no’ to both questions.

JN: Yeah.

LO: UKIP would certainly do that, and some others might too. And I think we all know we’re all split. What I want to see is the British government with a position and quick, and before the June heads of government meeting at the end of June, and I would like to see, if it’s humanly possible, just as the Labour leader and the Conservative Party prime minister, Conservative prime minister are getting together and handling the Scottish referendum, I’d like to see them get together in handling the issues of Europe. We’ll be far stronger in Europe if it’s seen that we speak with one voice. When you were talking about Angela Merkel, she speaks also with the support of the Social Democratic Party in Germany.

JN: Yes.

LO: They want political union, they want . . .

JN: (speaking over) Whatever happens in the . . . LO:. . . fiscal union.

JN:. . . German election next year . . .

LO: We must let them have that.

JN:. . . that’s going to (word unclear) yeah.

LO: I don’t want to have an endless blocking, legal arguments challenging the treaties, we should sit down as adults and work out, if you like, recreate the European Community, which we were very happy to be members of, ever since the referendum in 1975. It was only in 1990 it started to change with the euro. And that’s a perfectly legitimate choice and we could work happily and harmoniously together. We’d also solve the problem, which is what we need to do, the political problem of Turkey.

JN: Right, it seems to me what you’re saying is ‘an end of fudge and mudge.’

LO: I said that a long time ago, they’re still fudging and mudging, and I want a government now to show the British position. We’ve heard enough about the eurozone, we’re telling the eurozone too much what to do, that’s their responsibility, and I want to know what we’re going to do. And I want to protect British industry, I want us to have the advantage of a single market and a customs union.

JN: David Owen, Lord Owen, thank you very much, and your book is called ‘Europe Restructured’ thank you.

EVAN DAVIS: ‘We’ve had enough of the eurozone’, my goodness, probably getting quite a lot more of it on this programme over the next few months.

June 7 8.45am: Evan Davis said:

All pressure is on Germany today, will Angela Merkel please just pay everybody's bills and the whole crisis could go away. They're unbending attitude to the eurozone means she's inherited the Iron Lady label, formerly belonging to Mrs Thatcher.

Ulrike Sossalla, of the FT, said that Mrs Merkel had been talking a lot about European integration and was trying to speed that up, but she would not move towards Eurobonds this year, and that was her strategy, to first get more integration and then to accept financial changes. She added that she might also concede that Spain could be helped directly by EU funds. .

June 8 business news 6.15am: Simon Jack noted that Spain’s credit rating had been slashed again, with Ffitch warning that the banks there might need €100bn of help. Larry Summers, former US treasury secretary said the impact of the eurozone crisis on the US could be that it affected exports, so the problem was a threat to the world economy. Charles Dumas of Lombard Street Research said that EU aid to Spain would help, but there could then be deflation, further weakening the already ailing Spanish banks..

June 8 business update 7.14am: Christopher Graham, the UK’s information commissioner explained the new EU law requiring websites to obtain approval over cookies. He said they had looked at 55 websites and 40% were acting to comply with the new law. He added that compliance was likely to be via enforcement notices rather than fines.

June 9 bulletins: These said it was likely that Spain would formally request assistance for Spanish banks. It was noted that, according to the IMF, the banks could need €40bn extra. It was also reported that weak demand from Europe had weighed down the Chinese economy.

June 9 7.33am: Tom Burridge said the Spanish bailout was likely to happen, despite earlier denials. He said big banks were not in the same level of trouble as smaller ones. He noted that Spain had already done a lot about austerity so there were unlikely to be stringent conditions.

June 9 8.19am; Gavin Hewitt noted that if the bailout did go ahead, as seemed likely, the significance was that this was the fourth largest economy in the eurozone. Evan Davis noted that there were already strong austerity measures in place and asked how much more the country could take.

June 11 bulletins: Roland Burke reported that markets had responded positively to the eurozone’s plans to lend €100bn to prop up Spain’s ailing banks. It was said that European leaders were hoping that the perception would be that the eurozone had turned a corner.

June 11 business news 6.14am: Simon Jack said that the Spanish prime minister had claimed a victory in the securing of €100bn in EU bailout funds for Spanish banks. Lena Komileva of G Plus Economics said it was an important stabilisation measure. She agreed that the money would add to the nation’s debt pile, thereby further weakening its credit rating. Bob Parker of Credit Suisse Management said the markets had reacted favourably, but noted that if the deal had not gone through, they would have been much worse. Simon Jack also asked whether Ireland would be upset at the deal because under similar circumstances to Spain – a property crash – they had been forced to accept much more stringent conditions in return for their bailout. There was no direct answer.

June 11 6.31am: Tom Burridge reported from Spain about the Spanish bailout. He said it would calm immediate fears about the Spanish economy He added:

But Professor David Bach, from Spain's IE Business School, believes more fundamental reform and further eurozone integration are needed to address wider problems here and in the region.

DAVID BACH: This certainly gives some breathing room, right? But it still doesn't address the underlying issue of how governments are going to be able to finance themselves, governments in the periphery, moving forward. And one way or another, that big issue about a potential fiscal union and Eurobonds will have to be addressed. This buys time, but it doesn't resolve it.

TB: After a plea for help on Saturday, a goal in the football on Sunday. So two relatively big eurozone economies, Spain and Italy, draw one-all in the football. In the crisis, one of them, being Spain, has, of course entered a new phase. The hope is that billions from abroad for the banks will create growth in the Spanish economy, and ease fears across Europe.

Steve Evans, from Berlin, said that the local newspapers were not happy with the bailout deal because they saw it as a rescue package without strings. He commented that Mrs Merkel seemed to yield through being ‘pushed all the way’ and there was now a feeling that Eurobonds would happen, though he was not certain she would manage to persuade the Bundestag.

June 11 7.09am: Simon Jack said the markets might not like the Spanish help package because the money would go on the existing government debt pile. Gavin Hewitt said that Germany had thought it was vital to buy time for Spain, and believed the loan could be made because Spain had begun to embrace reform. He noted that the reaction in Greece was an increased pressure to relax some of the Greek stringency measures.

June 11 6.45am: It was noted in passing by Christopher Snowden, of the Institute of Economic Research that the European Commission had given millions to various environmental groups over the past decade.

June 11 8.10am: Robert Peston told John Humphrys that Germany was not making a big enough commitment to Spain – it was a sticking plaster solution, but no more. He said that the balance sheet of Europe as a whole – despite the eurozone problems – looked healthier than the UK or the US. He asserted:

So if you get the kind of political union where you begin to see the European Union effectively as the equivalent of the UK or a US in terms of budget making, tax and spending and borrowing, then, in theory, the problem is solved.

JH: Because we have a United States of Europe.

RP: Because we have a United States of . . .

JH: (interrupting) . . . of only those eurozone countries, of course, not Britain, for instance.

RP: But what . . . exactly. But what Germany doesn't want to do is it doesn't want to write a blank cheque to other countries where it has, its people have no control over the . . .

JH: Hmm.

RP: . . . activities of those countries. So, that is why this process of moving towards political union is seen by most people as essential to finding a lasting solution. And we’ve sort of crept millimetre in that direction, perhaps, with the nature of the Spanish bailout, but only a millimetre, we're nowhere near getting towards the kind of structure where you can view the European Union’s balance sheet of the equivalent of, as I say, of the UK's . . .

JH: Right.

RP: . . O and on that basis, the problem would be solved.

JH: And if we don't get there, then what happens? Can we carry on like this?

RP: No, we probably can't carry on, well, we can't carry on like this indefinitely. You know, because you know, what we've now seen with Spain is that this process of little by little simply means you go from small economy like Greece getting into trouble, then, you know, Ireland, then Portugal and now really big economies Spain, and, you know, if we don't at some stage draw a line and find a permanent solution, it will be in Italy next. You know, and you get to the stage where, frankly, markets lose patience, banks fall over, the whole thing falls apart. So, you know, you can't simply go on little by little with these piecemeal rescues. At some point there has to be a grand solution. Now, what I can't tell you John is, you know, what is the deadline for that, erm, but we all, I think, can agree that the sooner it’s solved the better. David MacWilliams, an economist, said that the banking crisis in 1931 ‘went to the core of the eurozone’ in that one bank collapsed and a chain reaction followed. That is why so much was being done to protect the eurozone. Professor Luis Garicano, of the LSE, said the Spanish bailout had been necessary because a number of banks had failed the stress test and they needed help to avoid panic. John Humphrys asked why the terms of the deal were different for Ireland – less favourable – than those for Spain. Mr MacWilliams said that Ireland did not have as much clout as Spain. Professor Garicano noted that Ireland had got its loan before current procedures were in place.

June 11 business update 8.43am: Kathleen Brooks of Forex.com suggested that banking debts were essentially the same as public debts and the Spanish bailout was effectively being underwritten by the taxpayer. She said it was unlikely that Ireland would be allowed to renegotiate the terms of its debts because it was a much smaller economy.

June 11 8.45am: Chris Morris reported from Greece about developments in the Greek election campaign. He said that Syriza was pushing a message of ‘hope and optimism’ that the Greek debts must be cancelled and the economy allowed to breath.

June 12 bulletins: These said that ministers would meet in Brussels to discuss overfishing and discarding.

June 12 business news 6.14am: Julian Chillingworth of Rathbones Unit Trusts said there was increasing concern over lack of clarity about the terms of the Spanish bailout. He added that an audit was continuing on how much local Spanish banks owed, and there were worries about foreclosures, triggering a weaker economy. He said that worries about Italy were also growing, as well as the Greek election.

June 12 6.52am: Sanchia Berg reported on the background to a meeting of European fisheries ministers. James Naughtie first said:

European Union fisheries ministers meet later today. Richard Benyon, the fishing minister of this country is trying to get changes to prevent overfishing and protect threatened stocks. Critics are saying that the EU's record is not very good at all, and if you look at cod, that's very clear - for many years now, scientists have been warning that cod, which is still our favourite fish, is pretty well at risk of extinction in EU waters. Now, there have been measures taken to support the fish, but they don't seem to have worked. Here’s Sanchia Berg.

NEWSREEL AUDIO: The trawler men catch well over half the total of fish consumed by Britain, but Iceland's government contemplates a law which may be a death blow to the industry.

SANCHIA BERG: 1958, the first skirmishes in the Cod Wars. Professor Callum Roberts, of the University of York.

PROFESSOR CALLUM ROBERTS: We were beginning to see the effects of an intensification of fishing after World War II, and that had begun to knock populations of fish down a bit, so fishermen were beginning to work harder to catch the same or less than they did before. And that really in a letter to Iceland's move towards increasing protection for its waters trying to increase its ownership over its waters, eventually, in the 1970s, to 200 nautical miles. SB: That led to British warships defending fishing boats.

ARCHIVE: You are interfering with lawful fishing on the high seas.

SB: But Iceland got its way. Over the following decades stocks of cod in northern European waters fell dramatically. As Britain was now part of the European Community, fishing policy was agreed jointly. A decade ago, the European Commission was warning that cod was close to extinction in these waters. They called for change, the industry protested.

HARRIET CASS (archive) People in the fishing industry have warned that 30,000 jobs could be lost if the European Union decides to cut cod and haddock fishing in the North Sea. The Fisheries Commission, which met in Brussels today, is considering massive cuts in catches, to save the species from collapse.

SB: Despite protests, there have been cuts in cod quotas over the years, and in some areas, fishing for cod is not allowed. But fishing for other species is permitted. And so cod does get caught. Professor Roberts again.

CR: We’ve continued to do things like fish using fine mesh nets for prawns, and in doing so we have carried on catching all of the cod, and of course, most of them are juveniles, because the nets have such small meshes, and so we never get a recovery that we would hope for.

SB: So what needs to be done?

CR: Well, if you want to recover the animals that are overfished, then you have to make sure that you control all of the fishing methods that catch them, whether they be methods that are targeting prawns or whiting or some other fish, or not. So we genuinely have to afford protection to the cod, if we want it to come back, and that means controlling all sources of mortality for it.

SB: That means establishing significant marine conservation areas, where no fishing at all is permitted. Ben Bradshaw MP was Fisheries Minister under the Labour government. He told me he’d tried to get such measures through at EU ministers’ meetings.

BEN BRADSHAW: Too many countries are in hock with their commercial fishing industries, and their fishing ministers and event their prime ministers are not prepared to stand up to them and to make the right decisions. I mean, when I was a minister, when we had a labour government, we had a red-green coalition in Germany, a small number of us, led by Germany, Britain, Sweden I would include in this pack, were trying to force change, radical change.

SB: But he couldn’t get a majority of states to agree.

BB: Steps have been taken but they’ve always been too little too late, because not enough countries within the European Union were prepared to support the very radical conservation measures which I believed then, and I believe even more strongly now, are essential.

NEWSREEL: It would be a bleak day indeed for the housewife if no cod, plaice or haddock were on sale at Billingsgate or anywhere else.

SB: For decades now we’ve been warned that cod could vanish from our tables. That’s unlikely, because there are still cod, in Norwegian and Icelandic waters. They have managed their fisheries better.

June 12 7.49am: James Naughtie said: European Fisheries ministers may relax some restrictions on catches at their meeting in Luxembourg today, because of the recovery in some stocks. They’re due to discuss a new regime. But of course, it's quite controversial in all kinds of ways. Something that there is a danger that stocks of very familiar and favourite fish in this country, cod, mackerel, hake, will fall dramatically, and the industry itself is also concerned about a proposed ban on discards, you’ll remember that nearly one in every ten fish caught at the moment is thrown back, dead or dying. Barry Dees is chief executive of the National Federation of Fishermen's Organisations. He is worried about the proposals.

BARRY DEES: There are a number of features of the package that’s on the table in front of the ministers, that are of concern and certainly, the discard ban is prominent amongst those. I mean, the industry is very committed to reducing discards, in fact, the wishful lead has reduced its discards by 50% over the last decade, but there is a fear that as we've seen over the common fisheries policy, you see the words on a bit of paper that don't deliver. And our fear is that the discard ban will play well in the media when it comes to practical implementation, there are a whole series of problems that aren't being addressed, haven't been addressed, just been skipped over.

JN: Barry Dees, chief executive of the National Federation of Fishermen's Organisations. Well, we're joined by Hugh Fearnley-Whittingstall, who, of course is a chef, but also a campaigner for sustainable fishing in the Fish Fight organisation, and we have got the fisheries minister Richard Benyon in our Westminster studio. I think there's a bit of a problem getting the line through, but we'll hope to talk to the ministry just a second, he may join us on the phone if that doesn't work, but Hugh Fearnley-Whittingstall, first of all . . .

HUGH FEARNLEY-WHITTINGSTALL: Good morning.

JN: From a sustainable perspective, and you’re one of those, and there are many of them who campaign about this, what do you want to see the European authorities doing?

HFW: Well, we definitely want to see a discards ban. We're talking about half a million tonnes of fish being thrown overboard, and this includes cod, prime cod, being thrown away because it's over quota, or because fishermen are throwing away smaller fish in order to maximise the value of their catch by keeping the prime specimen, specimens. Actually, that practice, called high-grading is technically illegal in the North Sea but it's happening every single day.

JN: In other words, they catch the fish, chuck it back, the fish are dying, when, in fact, if the fish are kept on the boat, they would be part of a catch and they could be sold and eaten?

HFW: Well, they could be counted towards the quota, or if they’re over quota they could be taken to the market but not-for-profit, for the fishermen. But part and parcel with the discards ban is we need to motivate fishermen to use more selective gear. It's not a solution on its own, and we need to reward more sustainable fishing methods altogether, that means targeting the better fish more successfully and reducing by-catch. And it's true there's been some successful trials, but the methods that have been proved successful have not been fully adopted by the industry. They tend to be small showcase trials that the gear then gets put on one side and the fishermen go back to their old ways, and that has to stop.

JN: Well, let me bring in the Minister, because I think he's joining us now, Mr Benyon, good morning.

RICHARD BENYON: Good morning.

JN: Thanks for joining us, I'm sorry about the communication difficulty there. On the discards ban, where does the government stand? RB: We think we can actually do better than an organisation like Hugh’s Fish Fight campaign have been calling for. For example, on pelagic stocks, we think we can have a ban in place by 2014. On white fish stocks, it's slightly more, located, but we're certainly amongst the countries that are pushing fastest and hardest for an end to discards.

JN: And what would the effect of that be on the whole market?

RB: Well, what I entirely agree with Hugh, (sic) was when he was saying that this is about working with the industry. We've had some very good trials of catch quota systems, which are going to see 0.2% of cod discarded this year, of vessels in those schemes. We've seen other very good schemes. So we know are working with the fishing industry is effective and is a way of resolving this problem, but ultimately it requires a clear bold statement, as part of the reform of this broken common fisheries policy, and with all my negotiations I always have this thing in the back of my head which says I wouldn't start from here, but it's where we are, that we want to see an end to discards, we want to see an end to the top-down centralised control of the fishing industry, and we want to see it brought into consideration with the wider marine environment. And these reforms, this means negotiations today are really important.

JN: And there's going to be a larger catch, it seems, allowed, or at least that's in the package in designated areas from 2013, on the grounds that there's been a sufficient recovery in stocks, do you accept that logic, or that argument rather?

RB: Well . . . there is some good news out there, I mean we saw 140% increase in the total allowable catch of cod in the Western Channel last December, and that was on the basis of scientific evidence. We want to see other stocks rise. There are real problems, globally on fish sustainability, we want to make sure that we are living up to our international obligations to have everything fished towards sustainable levels as soon as possible, and we've got some clear dates on that.

JN: Do you accept, Hugh Fearnley-Whittingstall, although you, like the Minister, would not start from here, that there is a recovery in the stocks some significant areas that are slightly larger catch in allowed is probably one that won't damage the recovery of other stocks?

HFW: Well, the figures I have is that the only cod stocks that are rated as not overfished are in the eastern Baltic, so I think any increase in cod quotas would perhaps be rash, and unless that is, it's a reward for a more sustainable practice, such as the catch quotas, which does mean that fewer fish are being killed, even though possibly more are being landed, because none are being discarded. We're still seeing huge amounts of white fish discarded, thousands of tonnes a year. It worries me somewhat that the ministers perhaps obliquely referred to a possible delay the banning of discarding of white fish, he's handed us the pelagic with a big fanfare, and perhaps suggested that we might be worrying a bit to get consensus on the white fish . . .

JN: Well, let me ask the . . .

HFW: I think that will be a huge disappointment.

JN: Let me ask the Minister to respond to that. Richard Benyon?

RB: Okay, well, there are certainly countries in the negotiations today who want to wreck this whole reform process, and discards there are those that want to push this well beyond 2020. We are not one of those, we want to see these much more in tune with the date that I think Hugh’s organisation put in The Times yesterday, as near as possible to 2016. But I'm going into negotiations with 26 other countries, I want to make sure that we are, that everyone understands that Britain is at the forefront of calling for radical reform, and that includes discards which we want to see ended as soon as possible, and as near to that 2016 date that was in The Times yesterday as possible.

June 13 bulletins: The Chancellor, George Osborne had said at a dinner that Greece might have to leave the eurozone before Germany would take further measures to help bail out other economies. It was also reported by Robert Peston that the head of the FSA, who was stepping down had claimed that if the eurozone opted for banking union with a single supervisor of eurozone banks, the current system whereby regulations for British banks was set by the European Union will become unworkable for Britain.

In the 7am bulletin, Roger Harrabin said:

Fisheries ministers have agreed that Europe should ban the controversial policy of discarding dead fish caught by accident under the EU quota system. After 24 hours of tense negotiations, the ministers agreed that the procedure should be stopped; the details are subject to more talks.

Fisheries policy has brought the EU into disrepute. The rules mean that crews who have a quota for one type of fish, but accidentally catch another have to toss it overboard dead. Fisheries ministers have bowed to the public outrage over the waste. Provisional dates agreed by ministers would see a ban on discards of mackerel and herring before 2014, and the phase down of discards of cod, haddock, plaice and sole, fully in operation before 2018. They will still be a battle over coming months over whether ministers, the European Parliament and the Commission will agree that fishermen in Europe should, for the first time, have their catches strictly limited to what the ocean can sustain.

At 8am, the final sentence was:

All details will be fought over during coming months, between the Council, the Parliament and the Commission, but the UK fisheries minister, Richard Benyon described the long night as ‘a massive breakthrough’.

June 13 business news 6.15am: Simon Derrick of the US Mellon Bank expanded on George Osborne’s remarks. He said he was making the point that hitherto, the EU’s approach to the banking crisis had been piecemeal and it was not working.

…And he’s saying, it would take a Greek exit to finally get the German public to admit that it has to move towards fiscal union and political union.

He added that the growing problem in Spain – where interest rates were continuing to rise, despite the EU help – was not at a sovereign debt level. He also noted that the Greek election at the weekend could cause further problems if the Greeks voted against austerity. Randy Krozner, a former governor of the US federal reserve, said the difficulty in Europe was taking measures and at the same time avoiding deflation. In response to whether the eurozone would survive, he said:

The necessary step has been taken to try to stabilise the banking system, the key though is implementation. It was the same thing with the TARP program in the United States. If you look at the risk spreads it wasn't the passage of the TARP that brought the risk out of the system, it was the implementation of it, the usage of it for the guarantees, and for the capital injection. And so we're really at a tipping point here. The mechanisms are there, but will they be implemented? If they're implemented, the euro can be saved.

June 13 Yesterday in Parliament: The Liberal Democrat Lord Dykes called for closer co-operation between the government and Francoise Hollande’s efforts to stimulate growth in the EU. It was said Lord Howell, for the government, had given qualified support for expansionary measures. Lord Peston thought this ironic, given its domestic policies. Lord Howell disagreed. Lord King asked if there would be continuing co- operation with Mr Hollande over defence.

June 13 7.25am: Chris Morris reported about the Greek elections. George Papakonstantinou, a former finance minister, said there was a clear choice for voters between those who favoured structural reform and those who wanted to tear up the agreement unilaterally. There was comment that the depth of the economic crisis had not been properly understood.

June 13 7.45am: Robert Peston asked Hector Sans, the outgoing chief executive of the FSA: :

It looks as if the eurozone is going to go for a banking union, much more centralised supervision of eurozone banks, and perhaps the sharing of the burden of bailing out banks by all eurozone governments. Do you think the UK should be part of that banking union?

HECTOR SANTS: No.

RP: But can you envisage, as someone who's wrestled with trying to influence Europe overregulation, how would it work where they were, you know, in a sense, retiring into a separate room, the eurozone countries, to determine their own regulation, and then they'd come out and talk to us about what they want to do and, you know, how that would affect our regulations?

HS: Yes, I think the current structure, it seems difficult to imagine that the current UK approach could work in the scenario that you've just described. So just to remind you, at the moment, what we say our UK approaches, which is that we support a single European rulebook, i.e., the rules are the same everywhere in Europe, we all have the same amount of capital, we all behave the same way in the markets, but we supervise locally, we take our own responsibility for delivering those rules and making sure they're complied with. That's the current model, but of course that rulebook is created by, effectively, one country, one vote. So if you move to an environment where the majority of the countries were inside the eurozone and therefore had a different, somewhat different agenda in respect to the rulebook, that would seem to be, and unworkable model, that we are dependent on a rulebook, which effectively we would have lost all control over. At the moment, we only have partial control over that rulebook, but potentially, in the scenario you're describing, we'd have lost all control over it. So I think no, I think we are at a tipping point whereby the current approach to European regulation for a non-eurozone country could well be, might not be, could well not be workable in the future.

June 13 8.45am: Justin Webb said:

Now, we told you yesterday about EU talks on the controversial policy of fishermen throwing dead fish back into the sea, and this morning of an agreement on those so-called discards. Our environment analyst Roger Harrabin is on the line. An agreement along what lines, Roger?

ROGER HARRBIN: Well, it’s a semi-agreement, but it does mean the fish have got a bit of love from the European Union, which they haven’t had much of over rather a long time. There are three things mainly, Justin, the big thing from the UK point of view, which the UK has campaigned hard on is a discard ban, a ban on the policy of allowing fishermen to chuck overboard dead those fish which they pull in by accident and which are not part of their quota. Now, all the details on this have to be agreed and it’s all a provisional agreement, but it looks like before 2014 there’ll be a ban on discards of mackerel and herring, and before 2018 on cod and haddock, which is something of a breakthrough I have to say. There will be more powers to countries to govern fisheries on a regional level, and there’s also – and this has been a very controversial one – a question of how much science will be allowed to govern the amount of fish that are taken out of the sea. They’re talking about a maximum sustainable yield and that should be imposed, where possible, by 2015, but definitely by 2020. Now, environmentalists are rather sceptical about this, and looking at the wording on this I’m not surprised, because the wording says that quantifiable targets should be linked to biological parameters, and the conservationists want to say that the biological parameters should govern the quantifiable targets, not be linked to them. But there has been a lot of movement overnight.

JW: Yeah, I mean, on the subject of the discards that is quite a big deal actually, isn’t it, because it’s something that’s been talked about for so long, if we are going to get firm dates then that is real progress?

RH: Well, that definitely is a big deal, the British government’s celebrating it, Richard Benyon the fisheries minister is calling it a major breakthrough, it follows this huge campaign of course by the TV chef and presenter Hugh Fearnley-Whittingstall, and we’ve heard so much recently about the malign effect of the media, this is one case in which a TV film has actually made a hell of a lot of difference to European policy, it’s really resounded through Europe and it shows that some things can make a difference.

June 14 business news 6.15am: There was discussion of an overhaul of banking regulation and the continuing slide of the credit rating of Spain. Nigel Cassidy reported on the plight of Greek pharmacies, which were running out of supplies and which were owed millions by the government. It was said that some were hoping for the return of the drachma.

June 14 business update 8.48am: It was said that borrowing costs had risen to almost 7% in Spain.

June 15 bulletins: These said that, in response to continuing worries about the eurozone crisis, George Osborne had announced the release to banks of tens of billions of pounds which could be borrowed at low interest rates. Chris Morris reported from Greece that the leader of ‘radical left wing’ Syriza party had demanded the renegotiation of the bailout terms. It was also said that ministry of energy officials had been told by the European Commission that help to a UK oil refinery threatened with closure would not be allowed.

June 15 6.10am: Iain Watson said:

This week Labour, the Unite trade union that represents a lot of the workers there, a local Lib Dem MP pressed the government to explore whether state aid might be possible, because they’re saying the French government has been willing to give around £16 million in state aid to keep a refinery there open. But Britain hadn’t approached the European Commission to do likewise. And the Department for Energy and Climate Change issued a response last night, which says, ‘We’ve come to the conclusion that the existing over-capacity in the refining industry means it wouldn’t be sustainable for the government to provide assistance, whether it was allowable under EU rules or not.’ And I think that means that it will inevitably close and some redundancies are expected next week.

June 15 6.35am: Chris Morris said that Spanish and Greek financial problems, as well as those in Italy, seemed to be getting worse. He noted that in Greece the government could be led by a man who opposed the bailout terms. He was receiving an enthusiastic reception at election rallies. He added that the election was a race between anger and fear, with lots of people voting for Syriza because of fear. Evan Davis, speaking to Steve Evans in Berlin, said that the hope was that Germany had unlimited resources to help everyone. Mr Evans said the message from Germany was that there was no credit card with unlimited credit and it was not budging on terms. He added:

Now, in fairness to the Germans, they are proposing that long-term, they have a vision, the roadmap if you like, for the eurozone, don't they, which is more integration, it's just not something they think can be built in the next sort of three weeks.

SE: Yeah, you do get a sense that Chancellor Merkel has changed her belief, and that is a belief that Europe now really . . . that that democratic deficit, whereby you get the control but not the voting of it were, does have to be changed, that you really do need to, well, the phrase is ‘More Europe’, you really do need to unite Europe before you hand over control. But they're also clear, and Mr Schäuble was clear the day before that that demands treaty change, and you and I know that treaty change does not happen . . .

June 15 7.33am: Evan Davis said that all requests to Germany for help in the eurozone crisis had been turned down. He asserted:

Whatever form the request takes, Germany's response has so far been negative. Well, as a result, the euro crisis appears to be worsening.

Paul Mortimer Lee of BNP Paribas said that problems in the eurozone were getting worse and spreading from Spain to Italy, with people very nervous about the outcome of the Greek election. . Mr Davis asked if Spain would quickly need a second bailout. Mr Mortimer Lee said not but was heading that way and he warned that the Greek election would then apply pressure on the eurozone for easier terms. Mr Davis said:

The Germans, it's hard to know quite where they're coming from. I mean, they clearly would like some long- term European integration as a result of this crisis, and yet the risk is, if you wait too long before starting to announce the way in which you're going to unite the bond markets, or the positions of the individual member states of the eurozone, the whole thing is going to blow up and fall apart before the Germans have got there. I just wonder what your take is on the Germans?

Mr Mortimer Lee said there had actually been quite a lot of movement from the Germans:

I think Germany sees this as an opportunity to, in a way, completely the incomplete, to have a fiscal and political dimension added to the eurozone and they want that to happen and happen in a measured way. Mrs Merkel is very much one for the step-by-step approach. And so really what we need at the moment is a very big step, great leap forward as Mr Draghi has said. And that's not Mrs Merkel's style, so she's struggling, and in addition what she wants are reassurances from the others that is Germany gives way in terms of financial support to some of these other countries and gives way in terms of a fiscal union or a Eurobond, but this, there'll be safeguards that will really stop people abusing Germany, and will keep their budgets under control. As the Germans often say, you wouldn't give somebody your credit card without some reassurances about how they were going to use it, and that's really their line at the moment. Mr Davis asked whether the ‘slow speed’ of the Germans would be affected by market panic. Mr Mortimer Lee said he did not think Germany was being conflictual and wanted cooperation between the various countries. They had made many signs that they wanted to do a deal including giving up sovereignty over their own fiscal positions in return for promises that other countries would behave reasonably. He added:

Of course, what we're talking about is fiscal and monetary integration in Europe, and this has to be a long-term process, you know, the Maastricht Treaty came years and years before monetary union, and monetary and fiscal and political integration will take a long time as well. What we can hope for in the immediate period ahead is a roadmap towards that integration, that's what the market’s demanding. And then of course, what we need are further measures to staunch the blood flow at the moment. And there I think the ECB meeting in early July is extremely important. If we get what we need from the politicians, I think you’ll see aggressive action from the ECB.

June 15 8.10am: This featured an exchange between shadow chancellor Ed Balls and Evan Davis about whether the UK economy was in a worse condition than the eurozone. Mr Balls said:

Why don’t you let me answer the question. The eurozone crisis is building and a threat to our economy, but our economy has not grown for almost two years. We’ve underperformed the eurozone in the last two years. Only Britain and Italy are currently in recession. Those are facts. I’ve always said to you, many times, a global hurricane is brewing, don’t rip out the foundations of the house here in Britain, that’s what the government did two years ago.

June 15 8.50am: Chris Morris reported from Greece about the ‘far right’. He said that Golden Dawn – probably the most extreme parliamentary party in the EU – had won 21 seats in the previous election with its anti-immigration and anti-EU bailout policies. He noted that the party leader had last week in a live TV debate thrown a glass of water at one woman and slapped another. Gina Dinopolou, a candidate for the party denied it was fascist. Mr Morris said that the leader nevertheless supported measures such as throwing immigrants out. He asked Dimitris Sotiropoulos, Professor at the University of Athens if the neo-Nazi label was correct. He replied that it was, as members had expressed ‘violent abuse’ against the Jews and had adopted Nazi insignia. Mr Morris spoke to a voter who said she had friends who supported Golden Dawn as a ‘revenge’ vote. Mr Morris then said the ‘radical left’ party Syriza had shaken up the system with its anti bailout programme and could win an ‘extraordinary victory’.

June 16 bulletins: These noted that the Greek general election would take place with the result in huge doubt. It was also noted that John Major had told the Leveson inquiry that Rupert Murdoch had asked in the 1990s for him to change his policy on Europe.

June 16 7.30am: Olaf Boehnke, the Berlin head of the pan-European think tank the European Council for Foreign Relations, said that Angela Merkel would not give into anything unless the Greeks accepted they needed to continue to reform. He noted that 81% of German people, according to a new poll, wanted stricter controls on the fiscal compact, and Mrs Merkel was influenced by that. Justin Webb suggested that Germany would have to compromise because the alternative was too awful to contemplate. Mr Boehnke said that the same poll showed that 55% of Germans wanted Greece to leave the euro, and there was a wish that it should stick to reforms. He added:

So at the moment, the temperature here in Germany is not that high that she could go to the public and say, okay, we have to really move on substance, so therefore, so I might, we might see, and this is my interpretation of what we’ve seen also some statements by Mr Monti and others actually, so we are preparing for this big, big crisis summit by the end of June again, where the commission and the Council will present a big package which has the full support by the German government, including maybe a banking union, including a fiscal union, including even more rights for the European Parliament, but this is the overture I think we are looking at the moment

June 16 8.30am: Chris Morris reporting from Greece as the elections approached, first went to a hospital facing acute staff shortages and hygiene problems. Mike Bradshaw from Pimco discussed the choices facing Greece. He warned that if the Greek people voted against the austerity measures, it would mean that cash to the Greek government would dry up, provoking the first steps towards leaving the euro. He warned that if the drachma returned, it would not be a very strong unit of currency and it would lead to both a large black market, and , as had happened in Argentina a reduction in the value of local currency. Socrates Lazardis, from the Greek stock exchange, said the scenarios of uncertainty were exaggerated, that ‘rationalisation’ of services was underway and that people were overestimating the possibility of renegotiation..

June 18 bulletins: These said the Greek election had been won by a centre-right party that wanted to honour its commitments to the EU bailout, but the victory had been narrow and pressure would remain to change the terms of the bailout. It was also noted that Francois Holland had won a decisive majority in parliament, clearing the way to his tax-and-spend agenda. Christian Fraser said Mr Hollande wanted the EU to adopt a €120bn investment programme. Bridget Kendall, reporting from Mexico, said that a meeting of the G20 was convening with the eurozone crisis top of the agenda. Gavin Hewitt said at 8am that there was relief in Europe that the prospect of a Greek exit from the euro had gone away. He said that the leader of New Democracy had already asked for concessions from Angela Merkel and these might be forthcoming, though austerity would remain central. Robert Peston said the markets had been relieved by the Greek results, leading to a rally. He asserted:

As for those all-important borrowing costs for Spain and Italy, logic dictates that they should fall gently, but not significantly away from the dangerous and unaffordable levels they reached recently. In the great tradition of the currency union’s crisis, all that’s been won is time to sort out what’s seen as the fundamental problems. For many, Greece’s weakness is that it still cannot afford its massive debts, and that outstanding questions of whether Spain and Italy will be able to refinance their much bigger debts without help from the European Central Bank and German tax payers remains, and that’s why some investors would agree with George Osborne, the British chancellor, that a Greek exit might have actually been the shock that eurozone to finally take necessary evasive action.

June 16 8.51am: Simon Heffer, the biographer of Enoch Powell, discussing the 100th anniversary of his birth, said that he had written that a single currency in Europe would be impossible unless there was also political union. He added that most people at the time thought he was ‘being difficult’. He had also toured Europe and in 14 languages had delivered speeches warning that a Federal Europe was not possible because of the differences between countries.

June 18 business news 6.15am: Oliver Burrows of Rabobank was asked whether the Greek election results were good for the eurozone. He said disaster had been avoided and took the pressure off the euro for a while, but only as a brief respite from the sovereign debt crisis. Gabriel Stern of Exotix said that the results showed that Greece was deeply divided with Syriza holding a key position. Mr Burrows said it was important that Greece got back on the austerity road to create a sustainable debt position. Mr Stern added that Germany would possibly now allow lower debt repayment rates and slower structural reform. He added that there was only so much that could be done by Greece, and asserted:

But there's only so much they can do, because if you give away too much in structural reforms, then the pace of debt reduction falls too quickly, then the IMF will come in and say, hey, that's not going down quick enough, that's not sustainable, we can be involved in this. So, unless Europe really do something radical, which I think it should do actually and give debt forgiveness on a much bigger scale, I think we've got a long struggle ahead.

Mr Burrows said that some sort of debt forgiveness was likely to be on the table along with renegotiation.

Mr Stern, asked about France, said the result meant that austerity was now more isolated as a solution. He said the focus would soon switch back to Spain. Mr Jack asked:

…we've been talking about banking union, stronger fiscal consolidation, there is a political dimension to that, these things need to happen quite quickly, and yet they are projects which really take years not months.

OB: Yes, well there are two aspects there, and you're right, fiscal unity is the only way that this can end happily, and these are steps towards that. The banking union is really a logical conclusion towards that, some level of quantitative easing, obviously or, you know, Eurobonds, for example, these are ways to get towards fiscal unity in the short-term, so can be done, although the political element of political and fiscal unity, obviously, takes a hell of a lot more time.

Mr Stern said that the Greek election results would be a relief to the UK.

June 18 6.11am: Bridget Kendall, reporting from Mexico at the start of a G20 meeting, said there were some grim assessments of the health of the global economy from bodies such as the WTO, and comment that Europe posed the single greatest threat.

June 18 6.30am: Chris Morris said that New Democracy had come first and Syriza second in the Greek elections, while the neo-Nazi Golden Dawn had attracted 7% of the poll. He said their vote had been expected to plummet but had not. He added that a coalition government, probably between New Democracy and Pasok would now be formed. John Humphrys said the discredited former government would form the new government. Mr Morris said that less than 50% of voters had supported the bailout and contended that the new government would now go to Brussels to renegotiate to some extent new terms.

June 18 6.34am: Christian Fraser, reporting from Paris, said that Francoise Hollande’s policies had received a ringing endorsement in Sunday’s election to the Senate and National Assembly, giving him free-rein to tax-and- spend. He noted that Pierre Moscovici, the finance minister, had said they would now re-orientate Europe His first steps would be budget cuts to reduce the deficit to 3% of GDP. Justin Webb asked to what extent he had to do things like the pension age, which he had promised. Mr Fraser said that these had been ‘token efforts’ to win votes and taxes would be raised to meet the deficit.

June 18 7.09am: Gavin Hewitt said it was expected that following the Greek election, New Democracy would be able to form a coalition with Pasok. He noted that parties who supported the EU bailout measures got only 40% of the previous vote and noted that Syriza, which had strong support was advocating throwing out the bailout. He added that this could spell major trouble because more than €11bn of further cuts were imminent under the bailout. Mr Hewitt noted that the leader of New Democracy had said that austerity was not working and would want concessions. He said that Germany had responded that this was not possible. He said that people were predicting that unless things changed substantially, there could be unrest on the streets of Athens by October. Mr Hewitt, then questioned about France, said that Francois Hollande was in a very strong political position and would push for his ‘growth first’ agenda. Last week, he had come up with a €120bn growth pact, and would be pushing this in forthcoming meetings of both G20 and the EU. Axelle Lemaire, a socialist MP who had won 57% of the vote (it was stressed) in the London and Northern Europe expat seat, insisted that Mr Hollande had been elected on an agenda of fiscal responsibility that would include cuts. She added that Mr Hollande would be backed by ‘huge democratic legitimacy’ in his push to change German policy. Gavin Hewitt said that Mr Hollande had some difficult sums to do because he seemed to want both growth and to cut spending.

June 18 business update 7.22am: Jane Foley of Rabobank said the markets were showing signs of relief at the Greek election results. She speculated that there could be softening of the austerity measures, though Angela Merkel appeared to be opposed to this.

June 18 7.35am: Chris Morris said the New Democracy had been narrowly ahead of Syriza in the vote. He spoke to the party leader, Antonio Samaras, who commented that he would love Syriza to be a fair opposition and wanted Greece to have investment and growth. The leader of Syriza, Alexis Tsipiras said austerity measures could not be continued. A New Democracy MP said the task now was to renegotiate the loan agreement. An academic, Euclid Tsakalotos, said:

The experienced political leaders of Greece, New Democracy and Pasok, are the people who have controlled and loved the clientelistic system, who have turned a blind eye to tax evasion, who have done nothing to reform the Greek state since the Second World War. So experience in the Greek cases isn't always an advantage.

Chris Morris said:

One of the things this new government will have to do is to persuade the EU to release a billion euros of money which was withheld after the inconclusive election back in May. If they fail to do that, then outgoing ministers say the government will be unable to pay salaries and pensions in about a month’s time. So while yes, they have some cards in their hand saying ‘Look, we only just made it, we only just got this through and you have to give us a little bit more slack’, on the other hand the Europeans will say back to them, ‘You’ve done a deal, you have to meet your commitments and austerity has to continue. Now, let’s talk about firing some of those public sector workers you’ve promised, let’s talk about privatising some of those big corporations that you haven’t yet done.’ So there’s a lot more pain to come for Greece, and as I said in my report, I think the fear is that it will raise social tensions again . . .

He added that Greece was deeply divided and voters were very cynical about politicians’ ability to change things. He noted that Golden Dawn, the neo-Nazis, had polled 7.6% of the vote.

June 18 8.10am: John Humphrys said there was relief in Greece because:

…in so many ways this election was a referendum on the euro - if they voted for the left-wing party opposed to the agreement, it would have almost inevitably lead to Greece being forced out and the consequences, most people agreed, would have been disastrous. The economic future of Europe already on the edge of a cliff, would have been shoved right over. But it's not that simple. Two parties that will almost certainly form a new government of national unity and the very parties that got Greece into this almighty mess in the first place, and whether they can now hold the country together depends on the people of Greece being prepared to go along with a programme of austerity that is already causing real suffering, and the biggest cuts have yet to bite.

Mr Humphrys said that many pharmacies were without medicines and he spoke to a Greek woman who was out of work and did not have enough money to feed her family. He plugged a report that he had made that would be contained in Panorama and then asked New Democracy MP Kiriakos Mitsotakis whether his party had already done a coalition deal with Pasok. He replied that it should be possible to form a government within a couple of days. Mr Humphrys said the Greek people did not like the bailout deal and there would have to be concessions. Mr Mitsotakis said there was agreement within Europe that there were elements of the recipe that had not worked and they would have to be changed, especially to do with the timeframe.

So I think that the new government is going to put forward a proposal by which it will commit to implementing all the structural reforms that have already been agreed, but in exchange for more European funds on the growth side, and in exchange also for a reduction of our deficit reduction targets. I think this is a reasonable proposition.

Michael Fuchs, a German MP, said that the terms of austerity had worked and they should not change regarding the national debt. Other changes might take place, but it would hard to explain them to the voters of Germany. John Humphrys said:

Well yes, but the problem that they're making, and Mr Misotakis has just outline this again, is the very, very strong view in Greece, not just that they can't take these cuts for very much longer, because so many people are suffering, but that they’re actually not working, and have been having the opposite effect on what was intended. Greece is becoming poorer, more and more people are losing their jobs, so therefore there is no growth and they must have growth. The question is whether your country is prepared to give them more time, are you?

Mr Fuchs said that the sums involved were €130bn and this had to be accounted for to the people of Germany. He said Greece must find a way to be more competitive so that it could trigger growth again. Mr Humphrys asked if more time might be made available to the Greeks. Mr Fuchs said that there must be more cuts in the Greek civil service because there were four times more per capita than in Germany.

Mr Humphrys put it to Mr Misotakis that Greece must obey the rules. He replied that what had been laid down had put too much emphasis on increasing taxes and not enough on cutting government service, but cutting wages further would not work. Mr Humphrys said that Greece had been too slow to effect change. Mr Misotakis agreed but said Greece was now on a precipice and needed help in job creation.

June 18 business update 8.40am: Simon Jack said that bond rates had fallen in the wake of the Greek election results. Nick Beecroft of Saxo Bank, said there had been a sigh of relief that Syriza had not won, and it had also been noted that messages were emanating from Germany that there could be changes in the terms of the bailout.

June 18 8.42am: George Stahthakis, a Syriza MP, said his party would not stop the demand for a bailout renegotiation. He said that if Greece did not return to growth it could not repay its loans.

June 18 8.54am: John Humphrys said:

Europe in crisis – that’s been the broad theme of the news coverage over the past month, for perfectly obvious reasons. But crisis? Really? Compared with 1914, 1939, wasn't that why the European Union was born, to prevent the continent ever again sinking into those dark days, when it was on the fate of the euro we worried about, but our very survival? Time to get things in perspective, or could economic crisis ultimately lead to a collapse in civil society? Well, that's a question for historians, and we've got a couple of them here. Miri Rubin, Professor of European History at Queen Mary University of London, and Laurence Rees, historian and documentary maker, take us back a few more years than that, if you would?

Mr Rubin said that the first attempt to unite Europe was based on trying to get adherence to Christianity. He asserted:

Now, it's really important when talking about Europe to remember there is nothing natural about an idea of Europe, it doesn't happen of its own, it's always the products crafted by leaders and thinkers and politicians. And the image that was crafted then was a very diverse continent, united by a commitment to a set of values, Christian values. And that also meant there is a cost of course, those who don't fit in, you know, Jews, Muslims, the Inquisition and so on . . . JH:(speaking over) Tough on them, yes.

MR: Absolutely, and I think a really important moment is, in the 16th century, for various reasons, you know, when this breaks out, we get two hundred or more years of really nasty bloodshed in Europe, the 16th, 17th Century, both within countries, Civil Wars and between countries of course. So that idea is clearly no longer working for us - as sort of a Christian Europe .

After Mr Rees explained that the German crisis of 1928-1933 had been caused principally by a collapse of banks, Mr Humphrys asked whether ‘it was inevitable’ that a similar disaster would now follow. Mr Rubin said that sensible measures were needed and politicians needed to listen. Mr Rubin, noting that Munich was exceptionally rich, said:

if you have to give half your wealth up in order to support a load of feckless Greeks as you see it, at what point do you have enough of that?

JH: But how does that become violent clash?

LR:I think it doesn't necessarily, it won't go like that, what'll happen is you're looking for more isolationism, you're looking to actually detach yourself from the broader Europe, and that, who knows where that could go.

MR: And very nasty populist regimes.

June 19 bulletins: Noted that the G20 was meeting against growing concerns about the euro and ‘lash out’ comments from Jose Manuel Barroso that Europe’s problems had been caused in North America. It was also noted that a new Greek government was likely to be formed and it was likely that the first moves would be to try vary the bailout terms. .

June 19 business news 6.15am: Max King, of Investec, contended that there appeared to be no way out of the Greek problems because the government debt levels were so high and Spain was also on the slide. He said:

And Spain, yes, Spain’s on the slide and as that Spanish gentleman said, they’re threatening to bring Italy down as well. So really this thing doesn’t work. And what markets effectively see, is they see this either going one or the other way. One way is full fiscal and political union, and the other way is towards a partial or indeed full breakup. And people are tired of trying to wait for them to try and pretend and muffle that voice.

Simon Jack noted that there had been reports that Ireland was now going to try double the repayment time of its bailout loan from 15 years to 30 years. Former Irish minister Dick Roche said this would not be a solution. He added:

Well, for the last seven or eight months, I’ve been arguing that the leadership in Europe should show some leadership, they should admit and accept that the institutional structure, the architecture on which the eurozone has been based is fundamentally unfit for purpose.

SJ: But haven’t they, haven’t they sort of tacitly admitted that and said, look, what we need to do is go to stronger fiscal integration, and that is part and parcel of admitting the same thing.

DR:(laughs) No. You’re quite right, they have dealt with one part of it. There were two fundamental problems in the architecture. One is that there wasn’t a strong fiscal spine, there still isn’t really a strong fiscal spine, but there’s a fiscal spine of some sort in the system as a result of the compact, the fiscal compact. But the second thing that’s missing – and it’s an important part of the jigsaw, because we still don’t have a European Central Bank that’s fit for purpose, it can’t control money supply, it doesn’t have federal powers to regulate the bank, it doesn’t have power to operate as a lender of last resort, it doesn’t have a cen—it doesn’t play that central role . . .

SJ: Okay . . .

DR:. . . that is played in other economies. Now, what I believe should happen is that the European leaders should decide that we are going to have a convention on the future of the euro. They should be honest. They should sit down and say, ‘The system hasn’t worked, let’s bring all the parties together, let’s bring the national parliaments, the European Parliament, the institutions of the European Union, and sit them down and say, ‘in thirty days, in a hundred days’ – in whatever the figure will be, ‘we’re going to come out of this room with a solution. We will decide what the parameters are. Currently we have a situation where because Germany, understandably, understandably doesn’t want to be picking up other people’s bills, there is a political reaction against the idea of moving in this direction.

Simon Jack, noting that interest rates in Spain were rising again, said the bounce from the Greek elections had not lasted long. Javier Díaz-Giménez, s Professor of Economics at the IESE Business School in Madrid A Spanish academic said that interest rates were not sustainable. He added:

I think the euro as we know it, it's clearly a failed project, I think the European leadership should acknowledge that as soon as possible, and give us the roadmap and, roadmap and new plans for a euro 2.0. What is it that the countries in the periphery have to look forward to if they go through this extremely demanding adjustment procedure? And in Spain, within Spain of course we have a totally dismal unemployment rate, over 25%, our growth scenario is very weak, and again the fiscal scenarios are also extremely complicated. I guess what the markets are concerned about in the case of Spain whether or not they're going to meet the target, the deficit target for 2012, which is 5.8%... Spain's GDP is about one trillion, so if we are looking at 50% rescue like in the case of Ireland, Portugal or Greece, it would be something to the tune of five . . . you know, half a trillion, and of course that's just an astronomical amount of money. And even if you bailout Spain, you know, the next, the next one will be Italy.

June 19 6.33am: Evan Davis suggested that at the G20 meeting, the eurozone leaders were feeling a little defensive that they were not doing enough over the euro. There was actuality of Jose Manuel Barroso, the President of the European Commission, who said that Europe was not complacent and contended that the problems had started with unorthodox practices in North America. Bridget Kendall said that Mr Barroso and Herman Van Rompuy had said they had a plan for dealing with the difficulties but had insisted there was no quick fix; their remarks about the US had come in response to a question from a Canadian journalist who had asked why North American countries should help with the problems of Europe. She added that the G20 would try sort out how much money would be available from the IMF if the situation in Europe spiralled out of control.

June 19 6.37am: Chris Morris said that the parties were still haggling over the formation of the Greek government. Justin Webb asked whether the government that emerged would have a strong bargaining position over Germany, perhaps because it would be ‘properly representative’. Mr Morris said the position against Greece in the EU had hardened and several countries would cut them off if they could. But he said it would be a gamble if they left the eurozone.

June 20 bulletins: It was said that Francois Hollande had announced that the eurozone was considering using eurozone rescue funds to buy the debt of struggling countries. Bridget Kendall said:

President Obama said he recognised that a euro club of 17 and a union of 27 couldn't always act as fast as nervous markets demanded, but he was confident that a clear framework would emerge soon of longer-term reforms and next steps to tackle Europe's immediate crisis. One option apparently been discussed is to use eurozone bailout funds to help drive down the cost of borrowing in Spain and Italy. France's president, Francois Hollande, said the idea, proposed by Italy was worth exploring and would be taken up when he and the German Chancellor met the prime ministers of Italy and Spain in Rome on Friday. Both Italy and Spain’s prime ministers were at the G20 summit and both publically appealed for swift decisions to help shore up the euro and help their beleaguered economies.

June 20 business news 6.15am: David Cameron was quoted:

What I’ve sensed at this summit is that there is a fresh impetus, with the eurozone members, in terms of using all the mechanisms, institutions, firepower they have to stand up and support their currency. Britain, I think is playing a very constructive role in this. We understand that the single currency has a remorseless logic, which means that if it’s going to work properly, it’s got to have a central bank that stands behind it, a banking union that backs it up, fiscal transfers between stronger and weaker member states to make more sense of it. So we have got a totally intellectually strong and coherent case about what needs to be done.

Justin Urquhart Stewart of Seven Investment said the idea that had emerged from the G20 of a new bon- buying process was creating Eurobonds but not admitting it, and the underlying issues – referred to by Mr Cameron – of closer banking union was not being addressed. He asserted:

…in terms of taxation, in terms of banking union and in terms of making bank, you know, and regulation. All of those elements need to be in place to solve the underlying disciplines of running a currency. All they're doing at the moment is still trying to address the symptoms by pumping more blood into the body rather than actually trying to stitch up the wounds

June 20 6.12am: Bridget Kendall said that a plan had emerged from the G20 summit – pushed by the Italian prime minister, Mario Monti – that eurozone bailout money should be used to buy the debt of weaker states. She said it would be discussed in more detail when Angela Merkel and Francois Holland met later in the week. Justin Webb said Angela Merkel was against the idea. Ms Kendall said that Mrs Merkel was under pressure from the US to change her position, and she appeared to have ‘softened up’.

June 20 business update 7.18am: Petros Christodoulou, of National Bank of Greece, said that the Greek government was trying to persuade the eurozone ministers to inject more growth initiatives into the bailout conditions. Measures would include reducing the public sector, external help in restructuring areas such as healthcare.

June 20 8.22am: Evan Davis said it was not clear whether the G20 meeting had adopted a proposal to use euro bailout funds to buy government. Paul Mortimer Lee, of BNP Paribas, said the aim of the scheme was to indirectly lower bond yields, taking over from what the ECB had already been doing. He added that there were a number of potential problems, including g giving existing bond holders an easy exit, and it could be viewed as yet more sticking plaster.

June21 bulletins: These said that the new Greek finance minister was attempting to persuade EU finance ministers to vary its bailout conditions. Chris Morris said the main objective was to delay some of the fiscal targets. He added that the finance minister would also received an official request to aid Spanish banks.

June 21 business news 6.15am: Lesley Curwen said that banks throughout the EU were facing pressure both to balance their books and to have more cash in hand to deal with problems. To do so, they were selling off assets. Ian Borman of SJ Berwin said the assets involved were both portfolios and loans and this meant the size of their business was shrinking, as part of meeting targets that got tighter each year until 2019. He added that the forced sale meant that some assets may be going too cheaply, but on the on the other it was also freeing capital for investment.

Ms Curwen explained to John Humphrys that the Spanish government was publishing an independent audit of its banks and it would be seen whether the €100bn promised by the eurozone in emergency loans would be enough. Santiago Carbo Valverde, Professor of Economics at the University of Granada, said that up to €70bn would be needed, so the €100bn offered would also provide a capital buffer. He explained the money was needed because the Spanish property boom had turned to bust. Ms Curwen suggested that this might force bond yields up further because it was bad news. He replied:

Of course, it would be much better of the European authorities, the EFSF, the European Financial Stability Facility, or the future European Stability Mechanism would take directly, you know, the shareholdings or the capital injection into the banks. But Europe has, I mean, hasn’t approved those arrangements, so any help that comes from Europe into our country, no matter whether it goes to the banks or anywhere, it has to go through some government underwriting, so of course that enhances the vicious circle of sovereign and bank debt, but there is no other solution with the current arrangements of the European Union, so we’ll have to do that. In any event, Spain still has a lower public debt ratio to GDP compared with other countries, however our main problem is the private debt, the bank debt.

George Godber, of Matterly Asset Management said he applauded the audit of Spanish banks but the underlying problem of bank debt was apparently worsening. He said:

We took huge pain in the UK in ’08, ’09 building our, bolstering our, you know, banks and building their capital reserves, they haven't done this yet in Europe and that's why this story keeps rumbling on and on and on.

He added that markets had already built in a default in Greece: …so I think there will absolutely be a renegotiation, but I think it'll actually be coupled with the start of, you know, what we're going to see as a European Marshall Plan, and infrastructure-led investment plan in Greece to try and stimulate some growth. So we'll have to monitor the situation closely with Greece, but actually I'm surprised that they've, you know, been able to form a government after one election, I thought it would take more.

June 21 6.12am: Bridget Kendall said that the Italian prime minister Mr Monti had proposed that eurozone bailout money could be used to buy the debt of ‘weaker states’ and this was being discussed at a meeting of the G20 in Mexico. Justin Webb said that in the past, pressure from within Germany had prevented this. Ms Kendall said that Mrs Merkel had indicated that she ‘would not be opposed’ if the crisis got worse.

June 21 6.54am: Paul Henley reported from Cyprus about steps towards a bailout triggered by exposure to Greek debts among Cyprus banks. He asked the Cyprus finance minister whether he would prefer a loan from Russia or China rather than the EU and noted that Russia had already provided a €2.5bn loan. An academic warned that because Cyprus was a tax haven, and if its status had to change as a condition of an EU loan, the core of the country’s wealth could be at stake.

June 21 8.54am: James Naughtie said:

Leading European newspapers are agreed in saying that countries leaving the euro could face unprecedented social consequences, collapse of law and order, rise in extremism and so on. But, it's worth noting, is it not, that Europe has survived the end of the single currency before. I know, it's on the tip of your tongue, it was in the 11th century, under the Byzantine Empire.

Dr Peter Frankopan said there had been a boom in the 11th century and then a bust as the empire came under military pressure from all sides and government maintained high spending and taxes. He added that they had tried coining more money, but that did not work. He concluded:

But, the big difference I think about today's European Union and the past, whether one picks Byzantium or Britain in the 17th century, is that you need to have the political ability to steer these things through.

June 22 bulletins: These said Ed Miliband would admit that Labour’s policy on immigration had been wrong and a future government would impose strict limits on the influx from the EU. Robert Peston noted that the IMF was calling for integration of government to deal with the euro crisis.

June 22 business news 6.15am: There was actuality from Christine Lagarde of the IMF urging the EU that day at a meeting in Rome to endorse bond-buying by the ECB. Virginie Maisonneuve, Head of Global and International Equities at Schroders Asset Management said:

I think what Lagarde is doing is putting some pressure on the leaders, knowing how lengthy administrative processes in Europe can be, pushing for short-term measures, but also long-term structural measures such as the fiscal and banking integration, which frankly, given the state of where we are in the crisis, I think are a logical step to think about Lesley Curwen said the meeting in Rome paved the way to the ‘crunch’ EU summit the following g week and asked what action could be taken and when. Ms Maisonneuve replied that top of the agenda would be bank recapitalisation in Spain.

June 22 6.32am: Chris Mason said that Ed Miliband would admit it had been wrong to allow so many eastern Europeans into the country and to dub those who opposed such numbers as bigots. Mr Mason added:

He says that any countries that were to sign up to the European Union would face strict limits on their ability to come and work here. That ties in with Romania and Bulgaria who . . . JH:(interrupting) But it doesn't affect those who are in already?

CM: Quite. Exactly, and actually, if you look at the list of countries right now that are close to access into the European Union, it's not a particularly long list, it pretty much has Croatia on it and that is it. The other idea is that if more than a quarter of a medium to large employers workforce was made up of foreign workers they may be obliged to inform local job centres of future vacancies, the idea there being removing what he will claim is a barrier to British workers finding local jobs. He also says there would be an emphasis on going after firms that are paying less than the minimum wage, arguing that not enough firms have been prosecuted for doing so. But as I say, you get a sense with the measures that he's outlining, the limited tools available, you know, not just to Labour leader, to any politician, trying to face up and grapple with this.

JH: Well that's it, it's really rhetoric rather than action, isn't it?

CM: It’s tricky to be seen to offer something and to be seen to have some solutions, without being seen to be promising something that is just completely undeliverable. He’ll take issue, for instance, with the government’s on an immigration cap, this desire to reduce the number, the net migration number to the tens of thousands to 2015, saying that it’s almost pointless chasing after it because the proportion of migrants that come from the EU versus from outside the EU means dealing with those and limiting those from outside the EU can’t really make much of a difference to the overall headline figure. I guess it’s one thing highlighting the problems another fleshing out possible solutions when the limits, the limits, the solutions available are pretty limited.

June 22 6.35am: Evan Davis said that the leaders of the four biggest eurozone countries were meeting with Christine Lagarde of the IMF warning that they must tie the zone closer together. Norman Smith said it was déjà vu in that Angela Merkel had been so pressurised before towards creating Eurobonds and the pooling of debts. He said it was thus unlikely that there was going to be a major change. But Mario Monti was more on Mrs Merkel’s wavelength, and he might have more success than Barak Obama, so there was a limited chance of some success.

June 22 6.54am: Evan Davis said:

The European Commission is taking Britain to court, and it's in a dispute over garlic. This is a pretty long- running saga, it goes back six years, when Britain mistakenly charged the wrong rate of duty on imports of garlic from China. Now, customs duties go to the EU budget, and the Commission says that the UK mistake led Britain to pay too little in, and it wants Britain to make the difference. Richard Ashworth is the leader of the Conservatives in the European Parliament. Good morning to you.

RICHARD ASHWORTH: Good morning. ED: It sounds like the Commission is being entirely reasonable, doesn't it? We basically put too little into the European Union budget, and we have to make up for our mistake, no?

RA: Well, we don't think it's being reasonable, and in fact we think it's being . . . it's an unnecessary squabble, and quite frankly taking Britain to court, trying to claim £15 million from our country is entirely disproportionate to the whole issue.

ED: It's just a principle, isn't it? If we managed to dodge paying money to the Europeans by charging the wrong rate of tax on something that's not our money, its European money, we should say, sorry about that, ever so sorry, it was our mistake, let us put the £15 million in. What's the argument? I can't even see why we’re even disputing it?

RA: Well, it's the word you used, well, you implied that Britain was dodging paying what it should do.

ED: No, it was a mistake wasn't it?

RA: No, but the member states act as collecting agents on behalf of the European Commission. Now, that's common to every member state, and of course, there is a set of rules that they have to work to. Now, in this case, there is a dispute - what category did fresh garlic fall into, was it processed, part-processed or was it fresh?

ED: (laughs)

RA: And it’s the technical detail which is the argument here, and that's why they’re taking Britain to court. But I have to say, I mean, it would be very difficult to try to persuade the taxpayer in these difficult times when money is short, here we are, the institution squabbling amongst themselves, going to court, running a massive bill for actually what is a technicality and should have been sorted out long ago.

ED: But do you agree that the British did make a mistake, or is the British claim that we applied the right rate and so the money isn't owed to Brussels?

RA: Well, in fairness to the Revenue, they're saying that they didn't. They're saying it was the appropriate rate. They’re also saying they used their best endeavours to collect the revenue which was due to the European Union, there is no dispute about that. But they're also saying that this was six years ago, move on.

ED: You know what, I think that if this was another country that had made an error of one kind or another, and had somehow paid less money to the rest of us than was due, you would be outraged, you’d be supporting the Commission. It’s just nationalistic, I mean, you’re just saying, ‘We don’t want to pay it, and we shouldn’t pay it and they should go away.’

RA: I would be looking critically at the behaviour of the European Commission. Of course I'd want to know that the member states were complying by the rules, but I'd also want to know that the European Commission was using taxpayers’ money carefully, sensibly and proportionately to the infringement.

June 22 8.10am: This item featured an interview from 2005 in which John Humphrys had tackled the then immigration minister Tony McNulty about the number of Poles who had entered the country following the decision to allow Eastern EU nationals to do so. John Denham, a current Labour spokesman on the issue, said that there had not been enough transitional arrangements in place.

June 22 business update 8.46am: Bill Hubard, an economist, said that the markets had been hoping that Spain’s continuing problems would be dealt with by the ECB starting quantitative easing. He said Spanish assets remained toxic. He claimed matters had not been helped by commentators who had said the danger level of bond yields in Spain and Italy was 7% when the figure was actually higher because they were bigger economies.

June 23 7.15am: Mark Lowen said that the ‘battle of the bailout’ match between Greece and Germany in the European Championships had been lost by Greece.

June 23 7.31am: Sanchia Berg discussed immigration figures in the light of ED Miliband’s admission that the Labour government had mishandled the issue. She said the majority of those coming into the UK were non-EU nationals – 238,000 who were not to 74,000 who were.

June 23 8.54am: Matthew Taylor, former advisor to 10 Downing Street, said the previous government had got figures of those coming to the UK from eastern Europe hopelessly wrong.

June 25 bulletins: These mentioned Alistair Darling’s remarks at 7.32am.

June 25 business news 6.15am: This explored whether Target2 – a clearing system between banks in the eurozone – was being used to, in effect, provide bailout funds, something which Germany had never agreed. It was said that the amount owing to Germany was up to €650bn.

June 25 7.32am: Alistair Darling, discussing Scottish independence, said that currency union inevitably involved political union.

June 25 business update 8.52am: Wilbur Ross, a financier, said:

Before the first version of the Greek crisis, there was no lender of last resort. Now that we’ve gone from having the traditional German central banker and Italian Pope, to where we have a German Pope, and an Italian central banker, we have a very big change in philosophy at the European Central Bank. They in fact are acting like the Federal Reserve, as a lender of last resort. That was a big missing piece.

June 26 business news 6.15am: Simon Jack said that Cyprus had become the latest country to seek EU assistance because it was exposed to €4bn of debt through banking holdings in Greece. It was noted that British deposits in Cyprus banks were mostly ring-fenced. A spokesman for the Bank of Cyprus said the eurozone needed to get its act together and decide whether it wants to be more of a solid bloc or not. Simon Jack then spoke to Steven Saywell of BNP Paribas. He said:

Let me ask you that question. Thursday this summit starts. We're getting summit fatigue slightly I think, some of us, but this is an important one, isn't it? What are we expecting?

Mr Saywell said the reason there had been a markets rally was that they were expecting agreement on Europe- wide banking regulation in the eurozone, as well as deposit guarantee and fiscal union. He added:

There's an interesting article on the front page of the FT this morning talking about sweeping new powers for Europe to take control, or, should we say, have some impact on budgets in the eurozone.

SJ: Yeah, if you look at the headline, actually, it says ‘EU plan to rewrite budgets’, saying that Brussels would be able to go international budgets for eurozone countries and actually start rewriting the terms of them.

SS: Well, the key point to focus on here is that I think this is one of the paybacks that Germany particularly, and some of the other core countries as well, would like in exchange for a movement towards Eurobonds. If the richer countries are going to backstop the debts of Europe as a whole, they want much more control over the spending. They certainly don't want to be giving a blank cheque book to other countries in the eurozone.

SJ: Yes, they say here that it would be a bit like, just as individual government departments have to go to the Treasury say, ‘can I have this money?’ that’s how Brussels will operate, as a sort of finance department for the eurozone. Very quickly and Spain, we had a downgrade of 28 Spanish banks, hours after they formally requested aid from Brussels. I suppose if you send out the SOS, you're going to get the downgrade?

SS: Well, I think the key point for the markets here is Spain has already asked for assistance that Europe is forthcoming, we’ve got potentially €100 billion there for Spain if that is needed

June 26 6.54am: Evan Davis said the EU summit would be discussing far reaching proposals including banking and political union and the possibility of the European Commission re-writing individual country budgets if they broke the rules. Steve Evans said the Germans had concluded that there had to be a radical realignment of the EU, a rewriting of treaties and more power to the centre. He said Wolfgang Schaeuble had called for a European finance minister who had powers to veto budgets and approve new budgets. Mr Evans said this raised the possibility of a referendum being held in Germany to consider the changes.

June 26 8.24am: Guy Verhofstadt. former Belgian Prime Minister, now leader of the Alliance of Liberals and Democrats in the European Parliament, said that agreement on the EU being able to re-write national budgets was essential. He asserted:

It is impossible to continue with the single currency, with the monetary union if there is no, not a fiscal union, full fiscal union, and apparently if we can give some trust to what is written in the Financial Times, they are going in that direction, and I should say, finally. Justin Webb suggested that this would pave the way for Eurobonds.

Mr Verhofstadt said it was also about part-mutualisation of debt, including eurobills (a kind of bonds) and then a European redemption fund. Mr Webb asked where it left democracy. He replied:

Well, I think that it's very clear that people in the eurozone want to continue with the euro, nobody wants to lose the euro, certainly not Germany, that it is (words unclear) at the moment, but to have a sustainable euro you need now to move towards a fully-fledged fiscal union including Eurobonds. And that was already the case from the beginning of this crisis. The crisis started in December 2009, they have only taken half measures, and it seems to be that the pressure is now so great countries like Spain and Italy that even Germany is ready to go (words unclear due to speaking over) JW: It’s big now, but I'm just wondering, down the road where someone has a budget and specific proposals and then they’re sort of vetoed by people in Brussels, you've got to accept, haven't you that that potentially is a fault line and you can imagine this being something that is trumpeted as a solution and a radical one, and it certainly does seem to be that, but also something that isn't potentially going to be signed up to by the people of Europe?

GV: Yeah, but the European Commission is also under democratic scrutiny. And the democratic scrutiny is exercised by the European Parliament. And this European Parliament is elected every five years by the peoples of Europe.

JW: And you think that’s enough?

GV: It’s a democratic scrutiny on this.

JW: Do you think it’s going to happen?

GV:(laughter in voice) Well, let’s wait until the summit’s over of Thursday and Friday because it’s not the first time that a few days before a summit they announce a breakthrough on these issues of an economic and fiscal union and political union, and then finally you see that they cannot agree on these issues. But let’s . . . I hope that they make this breakthrough on Friday, yes

June 27 bulletins: It was said that Angela Merkel had said that she did not think Europe would share responsibility for debts in the eurozone in her lifetime. Neil Sleat said that disagreements between France and Germany were intensifying, with Francois Hollande pushing hard for common liability for debts. He added that Mrs Merkel was insisting that before any change was introduced, ‘building blocks towards greater fiscal, banking and eventually political union in Europe must be put in place’.

June 27 business news 6.15am: Simon Jack said that the idea of Eurobonds appeared dead in the water because of opposition from Angela Merkel. Kathleen Brooks of Forex said it appeared that negotiations over the euro appeared to have become more politicised, with a breakdown clearly evident between France and Germany. Simon Jack said that Britain had a list of safeguards in relation to banking union. Ms Brooks said that despite pressure from Italy, there was as yet no agreement on the matter. Tom Stevenson of Fidelity agreed there was little chance of real progress.

June 27 7.16am: Justin Webb said:

No shortage of ideas being floated in the European Union for ways to save the euro. We heard about one of them on the programme yesterday. Guy Verhofstatd, the former Belgian Prime Minister praising the suggestion for Brussels to take control of national budgets, a suggestion that could eventually lead to Eurobonds as well. But not so fast. The reality is, as the European Union faces another summit beginning tomorrow that the nation state still exists in Europe and elsewhere, and with it national views on where sovereignty begins and ends. So the German chancellor, Angela Merkel, supported now to have told a private meeting of her own MPs that total debt liability, Eurobonds, will not come to pass ‘as long as I live’, as she put it.

Chris Morris reiterated that nation states still existed and said that these states currently disagreed strongly about the way forward. He said that Angela Merkel was still resisting the proposals that Spain and Italy thought were necessary to deal with the debt crisis. He added that a draft document moving towards greater fiscal union – including a eurozone treasury had been toned down, but still contained radical measures including an EU-wide banking supervisor with greater powers over national budgets. He noted: …these are huge changes in Europe - changing the relationship, notably of course, between the EU and nation states, in profound ways which will intensify what are already huge debates about legitimacy, in countries inside the eurozone and of course outside like in Britain.

.

June 28 bulletins: It was said that France and Germany had failed to reach agreement on tackling the eurozone crisis in terms of sharing liability for struggling countries’ debt. Gavin Hewitt reported:

When the leaders arrive in Brussels later, they will face calls to take emergency short-term measures to help lower the borrowing costs of two key countries - Italy and Spain. Those countries, and France, would like to see money from the eurozone's bailout funds go directly to bolster their banks, and to buy their bonds. They also want to see a pooling of debt. The German Chancellor, Angela Merkel, has already accepted that all the pressure will be on Germany. She has said she is concerned the discussion will be too much around joint liability, and not enough about controlling national budgets. There is likely to be agreement on a growth pact, the first steps towards a banking union and some support for long-term moves towards genuine economic and monetary union. But fixing the eurozone in the short-term will be tough, with countries so divided.

June 28 business news 6.15am: Simon Jack said that Angela Merkel was blocking the resolution of deep- seated differences in the approach to settling the eurozone crisis. Marie Diron of Ernst & Young said there would be gradual progress, but it was good news

that for probably the first time on the agenda of this summit are very big reforms, banking union, political union, fiscal union. Very big reforms proposed by and really championed by two countries in particular, Spain and Italy, to doing a lot in terms of fiscal austerity. So that is showing that really they are doing their side of the bargain, and they really are calling for the countries to move towards the middle.

Simon Jack said this would not help Spain when bond yields were at 7%. Mr Diron said it would help Spain if the ECB started buying bonds. Mr Jack suggested matters would be kicked down the road again. Mr Diron said a clear statement was needed.

June 28 6.36am: Sarah Montague said that differences between Germany and France were likely to hinder decisions on the euro crisis. Chris Morris said the leaders were agreed on €130bn of measures designed to improve growth and jobs. He added that on the table was a paper about closer banking union and changes in bank guarantee funds. He added:

I think the problem is, for those who worry about not what the EU will look like in ten years, but what it will look like on Monday, they ask the question will any of this help to bring down borrowing costs of the countries like Spain. The yield on ten year Spanish bond was again close to 7% yesterday, and Prime Minister, Mariano Rajoy told Parliament very plainly ‘we cannot go on like this for much longer, if this continues in this way, we will have to seek assistance’.

Mr Morris said that against this background, things could become rancorous because the Italian prime minister was pushing hard for eurozone money to buy bonds and Germany was against this. He added;

And I think that's where we are with this crisis now. Its roots are economic, its roots are financial, the logjam now is political. And we saw again last night, I was in the courtyard of the Elysee Palace here in Paris when Angela Merkel arrived for dinner with Francois Hollande, it was all smiles, there were handshakes, but that can't really disguise profound disagreements on these basic policy matters - what is the best way to get us through the next couple of months?

June 28 7.33am: John Humphrys said Germany was coming under tremendous pressure to allow eurozone funds to be used to bring down borrowing costs. Chris Morris reported from France. There was actuality from Francois Hollande:

We both want to deepen economic, monetary and in the future political union, to arrive at a point of integration and solidarity.

CM: But it’s chicken and egg. She (Angela Merkel) says integration first, then we can show more solidarity with others; he says we need to show solidarity now, or there may not be that much left to integrate. Earlier in the day, speaking to Parliament in Berlin, Mrs Merkel acknowledged that Germany is the centre of attention..And it has become rather fashionable recently to have a bash at Germany - if only Berlin would put its hand in its pocket, everything would be fine.

Carsten Brzeski, eurozone economist at ING bank, said that people simply wanted German money, but they would not pay back anything. Mr Morris, noting that the French system of government was almost monarchical and was reluctant to cede sovereignty, said that Mr Hollande’s deputy nevertheless claimed that current economic policies did require the surrender of some national powers. Olivier Ferrand said:

What’s in sight is giving up sovereignty on the Treasury. You will have an integrated EU treasury, and at the end of the national treasuries, so that's exactly giving up sovereignty for the eurozone

Mr Morris asked whether this could be politically risky, and Mr Ferran agreed it could, and create divisions. Mr Morris said:

But on issues of sovereignty, Francois Hollande will come under attack from the left as well as from the Gaullist right. So he will have domestic problems to deal with, even has EU wrestles with the immediate issue of how best to get along with Mrs Merkel. The Franco-German partnership has been rocky in the past, but now . . .

ANNE-MARIE LE GLOANNEC: The problem is that this time we don't have any time, there is no honeymoon whatsoever, and heads of state and government have got to come very quickly to an understanding.

CM: Anne-Marie Le Gloannec of the Centre for International Studies says the crisis is exposing differences of approach between France and Germany which have been there for 40 years.

ALG: You go back to the first plans for and monetary union in the 1970s, you exactly had the same argument about monetary union first or political union, having the frameworks right first. And this floundered. But now we have a euro, we can't have anything floundering, and we have a crisis and we must come to an agreement. I do this, you do that, I do this, we do that, at the same time, otherwise it's not going to work.

CM: In this building of a new, more integrated eurozone, there's no doubt that Germany is still the key player, and ultimately the paymaster. But other countries too have big, tough choices to make, and none more so than France.

JH: Chris Morris reporting there. Well, Richard Corbett’s the adviser to the President of the European Council, Herman Van Rompuy. Good morning to you.

RICHARD CORBETT: Good morning. JH: Monetary union first, or political union first - that's how the question was phrased in Chris Morris's package there. But union of some sort, greater union inevitable, is that it?

RC: Well, that's a good question, because people use the word political union without saying what exactly they mean.

JH: Yes.

RC: We have a European Union now, and it is pretty political. So we need to look at exactly what changes are needed to deepen the economic and monetary union and make it work better.

JH: But what we really mean is, isn't it, some sort of United States of Europe, in which there would be a common chancellery, in other words, the big economic, financial, physical decisions would be taken centrally.

RC: Not necessarily, certainly not all of them. We've already got tough common rules on the . . . that have recently been toughened, on the amount of debt that countries can issue. Nobody is saying that we should tell countries what they choose to tax and what they choose to spend on . . .

JH: Yet.

RC:. . . that remains a national decision, and even under the proposals being discussed now, that is up to each country, that's a matter for them, as long as they don't finance their spending by excessively borrowing or going into huge debt, that then threatens their neighbours.

JH: Right, but the question is whether the mechanism to enforce that has to come first, or whether you have to have a greater, a closer, deeper political union first?

RC: Yes, the question is, well, rather whether you bring in tougher mechanisms to ensure that before you do things like mutualising a proportion of your debt. Germany is very reluctant to do that without tougher rules to make sure that countries that then borrow or make use of a common debt issuance, that it’s not just going down a bottomless pit is what they want to make sure.

JH: And so long as Germany is saying that, it ain’t going to happen?

RC: Indeed. But that’s why you have meetings to talk these things through, to find compromises to reach a deal that is in the end a deal which has to be acceptable to everybody.

JH: Yes, but this is the point, isn’t it? If at this stage, knowing the kind of crisis that we are in, we’ve had ample evidence of it, and the crisis is not going away, it’s growing deeper and deeper and deeper almost with every day, if Germany is still adamant that it will not do what many people believe is needed, well, the prospect is grim isn’t it?

RC: That rests on the assumption that mutualisation of debts in the short-run is the only immediate answer to the short-term crisis . . .

JH: (speaking over) Well, what's the other one?

RC:. . . which is . . . there’s not, there’s quite a range of things. We do already have in place, we didn’t have this at the beginning of the crisis, but we now have in place the so-called rescue mechanisms, the bailout loans, can give loans to countries in need, give them time to take the corner (?) for instance.

JH: (speaking over) Yeah, but they’re not working are they, because we’re seeing what the interest rates are in countries like Spain and Italy. RC: Well, Italy hasn’t received, and Spain hasn’t yet received any (words unclear due to speaking over)

JH: No, but we know the money is there, and the markets know the money is there, but is not impressed, but they’re not impressed by the fact.

RC: No, well those countries, Italy hasn’t yet made a request, because it doesn't know whether those market rates are still . . .

JH: Sure.

RC:. . . going to remain so high. They might not. If they do, they may well make a request, we will see. But at the moment, where those loans have been given to countries like Ireland and Portugal, they have made a big difference. That mechanism is there, that's one of a number of things that you can do at the moment. Reforms in the heavily debted, those inside the euro and outside the euro by the way are also important parts of turning the corner.

June 28 8.47am: Sarah Montague said that measures being considered at the last ‘summit’ included introducing Eurobonds, although Angela Merkel had said she strongly opposed the measure, together with more control by central authorities over finance. She said that Francois Hollande was against ‘giving sovereignty’. There were vox pops from around Europe to gauge levels of support for the changes. In Spain, an out-of-work passer-by said things were very difficult. Tom Burridge said the government’s revenues from taxes were plummeting because of the numbers out of work, and there was doubt whether the government could met the latest Brussels-imposed tax-and-spend targets. Alan Johnstone said that in Italy a problem was that the country’s fate was tied to the money markets because the government was forced to go to them to borrow money . He said:

…there’s a rather circular process going on here. Italian banks will be loading up on Italian government debt, but as concern gradually rises about Italy’s long-term ability to honour its debts, so the markets worry about the health of the banks that hold those debts. In other words, they worry about Italian banks. And if the banks here were to get in serious trouble as they did in Spain, the government might need to ask for European money to bail them out. When Italy borrowed that money, it would add to its debt mountain. That would add to the worries about Italy's ability to pay its debts and that would have to worries about Italy's banks, and round we might go again. It's called the debt or doom loop, and you just might hear more about it as the eurozone crisis.

Steve Evans, from Germany, said there was a feeling of chickens coming home to roost because interest rates had been set to allow German exports. A consequence, however, was that this meant German banks had lent too much money to struggling economies. He said that it was now estimated that the collapse of Greece, Ireland, Italy, Spain and Portugal could cost the country €600bn, enough to wreck German finances.

David Miliband then said that the only way out was if ‘everyone bends a bit’. He said:

Of course, German money is already being put at risk if you like because of the way that the ECB, the European Central Bank supports peripheral countries at the moment. And I think that the great missing element in the German debate is the potential costs of breakup, and looking at the debate in the German Bundestag yesterday, you got a very strong sense of lots of pressure not to do anything, but little sense that the gravity of the problems facing the German economy in the context of a breakup are really understood, and I think that is what is worrying, so everyone has to bend if there's going to be progress.

SM: Okay, George Soros gave an interview with Die Spiegel where he made that point, but went further and sort of said, no country has benefited more from the eurozone Germany, both politically and economically, and suggested that therefore what had happened as a result of the introduction of the euro is largely their responsibility. Do you think in some ways he's right?

DM: Well, he's highlighted one absolutely critical decision that was made a couple of years ago by Mrs Merkel. She insisted that there should be a national responsibility for the liabilities of national banks and national states, until then there'd been an assumption of what's called joint and several liability. That’s what’s created the situation where today countries like Spain and Italy have got such high borrowing costs that they can't see their way out of the doom spiral as it's called, that was referred to in the package earlier. So I think that George Soros is right to highlight the responsibility of Germany. However, I don't think we should demonise the German position. When Mrs Merkel says that if she's going to underwrite the eurozone she wants to be sure that other members are going to be operating by sound set of rules, that's not an unreasonable position.

SM: I'm sure it isn't unreasonable, it's just that time is pressing, the markets will be opening on Monday morning, after the summit, looking for something and that’s why I . . .

DM: You’re absolutely right.

SM: And then . . .

DM: But that’s the thing, at the risk of an accident is rising with every week, month, day of delay. And I think that is what is concerning people, that what seemed like an outside chance of an accident wrecking the union and actually leaving everyone in a worse position is now rising.

SM: So this line that she is reported to have said earlier this week, the equivalent of ‘over my dead body’ about Eurobonds, that idea of actually mutualising debt and Germany putting itself behind being responsible as well for this debt; do you think that eventually she will give on that, just because it's not only in everybody is interest, it's in Germany's interest?

DM: Well, I actually believe her when she says she is absolutely determined to save the euro and absolutely determined to save the European Union. There are two great father figures in her life really, her own father a pastor in East Germany who taught her prudence, but also Helmut Kohl, the political father who is, in many ways, the author of Europe's, Germany's unification and of Europe's unification. And so I think we should take seriously what she says about her determination to address the eurozone problems, which is playing a very dangerous game of chicken, because she's absolutely determined not to move until the last minute. And if you think about it, there's really sort of a Bermuda Triangle here, there are states, states with high levels of debt, there are financial institutions with high liabilities and quite a lot of instability that could be passed onto states. And thirdly, there is low or no growth. And those three things need to be addressed together, if this is to be properly done. Now, I think what's concerning is not just the substantive differences between the countries, it’s that the traditional ways in which the process of European politics has been done isn't working. Traditionally, it's either been the European Commission which has come in to bring a solution that has power and credibility, or a country like Britain has played the role of honest broker. That isn't happening at this summit . . .

SM: Okay.

DM:. . . and I think that's very concerning.

SM: But realistically, what role could we play? Because sure, we are in the frame undoubtedly, and we are part of the EU, but we are, this is not our specific problem, and anything that Britain says, those who are deeply involved in it quite rightly would raise their eyebrows and look at Britain and sort of say, back off. DM: I think it depends how we do it, we've dealt ourselves out of the game, obviously, by the debacle last December, when the primaries to quote, unquote, ‘vetoed’ fiscal treaty, but then it was just created under a different mechanism of the 25. So I think that's left is in a very, very weak position. We are obviously not in the euro, but I don't think that means we have no influence, because actually, most people recognise that the European financial institutions, that the European economy are absolutely knitted together, and you need a single market with growth, as well as sound fiscal and financial policies. So I think there is a whole (sic, means role?) that traditionally Britain has played. I also think it's striking that countries like Italy, led by the hugely respected Mr Monti, he's also now I think, in a weakening position and I think that what’s striking to me is that it's not just the left/right division in Europe at the moment, you've got countries like Spain and Italy joining with countries like France, with a newly elected socialist president, and I think that this is the moment when really the test is. Because you got the heart of the original creation of the European Union now split, and I think that's why people are raising their alarm, people like George Soros that you mentioned earlier.

SM: And that test, when you look at it, and the way that the land is lying at the moment, how likely are they to pass it?

DM: Well I think that the likeliest outcome is that they'll muddle through, if you like, muddling through plus. And what you’ll get . . .

SM: (speaking over) And, and, and the euro will survive?

DM: My own view is that the majority chance is it will. I think there’s too high a chance of fracture, but I think that it will. And if you look at the report of the so-called four presidents, the president of the European Central Bank, the European Commission, the euro group and the European Council, you see there the outlines of the measures on banking, on the banking union, deposit insurance, and bank resolution and supervision, I think you'll get some meat out of the summit, because I think they recognise that if they do nothing at all, then they really will get a very loud raspberry on Monday from the markets.

June 29 bulletins: It was said that the leaders of the 17 eurozone countries had agreed new €120bn of measures to restore financial stability after earlier also agreeing to boost growth and create jobs. Andrew Walker said this included allowing banks to be supported directly – without further indebting governments – and using bailout funds to buy bonds. These were measures wanted by Spain and Italy. Gavin Hewitt said:

After a long night of tough talking, Europe's leaders claimed the real breakthrough in the eurozone crisis. They have agreed a set of emergency measures that are intended to bring down the borrowing costs of countries like Spain and Italy. In future, the eurozone’s bailout funds will be able to support troubled banks directly, without having to channel the money via a government, so increasing its budget deficit. That is intended to break the so called vicious cycle, whereby helping banks only increased the debt of the government concerned. The leaders also agreed that the zone’s rescue funds could buy countries’ bonds, if the government was abiding by the EU's budget rules, then it wouldn't have to accept new austerity measures in return for help. By the end of the year, there will be a single supervisory body for the eurozone’s banks, first step towards a European banking union.

June 29 business news 6.15am: There was actuality from Herman Rompuy that agreement had been reached at the European summit to allow banks to recapitalise directly in some circumstances, with a single supervisory mechanism, and to open the possibilities to make use of financial stability instruments, the EFSF and ESM, in order to reassure markets. James Shugg of Westpac Bank said this facilitated bank recapitalisation without adding to the nation’s debt pile by allowing them to buy bonds of struggling countries to keep bond yields down. In addition, bailout funds would be able to buy bonds directly. He said:

I’m hugely impressed by this, it shows that they can actually make some decent decisions, but like the other decisions over the last couple of years, it’s not going to be enough. What we want to see is the European Central Bank saying they going to do that by expanding their balance sheet. They could easily take another . . .

SJ: (interrupting) When you say ‘expanding their balance sheet’ a lot of people won’t know . . .

JS: Printing money.

SJ: Just printing money, is that what you mean?

JS: Yeah, that’s what I mean, that’s right.

SJ: So they are electronically create money and they go out and they buy, basically, the bonds.

JS: But they don't even have to do it, they just say they're going to do it, and because we know they have an almost infinite ability to do so, it would help hold down those yields. But this is just a necessary part of the solution.

SJ: But not sufficient?

JS: No. I mean, we still have to see fiscal integration, or transfers, and all the other stuff.

SJ: Well, that was the other part of the communiqué that they basically had this idea about a closer banking union. I mean, what people who will want to know is does that include the UK, and how does that affect us?

JS: No, all of this is just the EU leaders. So . . . for the 17, the 17 members, you’ll find. I don’t think there’ll be . . . you can’t have a banking system that includes a different currency like that, it just wouldn’t work.

June 29 7.49am: Peter Hahn of the Cass Business School said that the changes in the banking system agreed by the EU summit would affect Britain because there was a unification of the system of banking in 17 countries, and 17 was a majority in the EU overall. He added:

So our banks essentially would now become outside of the ability to determine the rules for banking supervision. And we would have to choose whether we want to be inside the European Union or probably leave it.

James Naughtie said:

And what would the banks, do you think, decide?

PH: Well, from the banks’ standpoint, it's quite a challenge. I would think the banks are going to end up being, er, lobbying on behalf of being part of the European Union, because if this goes through we, our banks in London, will find it much harder to compete inside the eurozone.

JN: But would they rather be, I mean, you use a fairly dramatic phrase, ‘outside the European Union’, would it make more sense for banks to be outside the European Union in London, than inside the European Union in Paris or Frankfurt?

PH: Well, you know, we've always had two cities here. I think we've got the UK economy banking system, and we have London financial centre, which is really the centre of the eurozone’s financial business. And that's part of that business could leave. So all those US banks that are here, that are underwriting bonds that are denominated in euros might see their future as moving to Paris.

June 29 6.35am: Chris Morris said the only way to get things done at an EU summit seemed to be to stay up all night. He said Spain and Italy had held out to the small hours to get relief from their high borrowing costs and had won what looked like a major concession to allow EU bailout funds to be used directly to support struggling banks. He added that the quid pro quo was that Germany would get its wish for more centralised control of the eurozone of ‘what hitherto have been national financial responsibilities’. But he said that the idea of Eurobonds being issued was a considerable way off because Angela Merkel was still opposed. Mr Morris added:

I was speaking to a senior bank yesterday who said countries now realise that either you can have the euro, and you lose some of your sovereignty, or you keep your sovereignty and you lose the euro - you can't have both. Mrs Merkel created headlines a couple of days ago, when she said there will not be total neutralisation of debt in eurozone ‘as long as I live’, but the keyword really, was ‘total’, partial, in the future, yes. If countries are prepared to take these fundamental steps of ceding sovereignty to centralised institutions, and this is a step along that road, a lot of discussion ahead, but hopefully for Spain, and also measures have been taken overnight to try and help out Italy as well, countries that want to apply in the future for eurozone bailout funds to buy their bonds, and therefore reduce the amount they have to pay to borrow money, no longer automatically go into a formal bailout program like in Greece and elsewhere. So that, if you like, the concession that's been given to Italy. All this is part of this movement towards this much closer integration

June 29 business update 7.17am: Simon Jack there were concerns that an agreement to create ‘closer banking union’ could see the UK ‘slightly isolated’. Sony Kapoor, of Redefine, said that replacing the European Banking Authority with the ECB could freeze the UK out, because the EBA was previously a collection of national supervisors with limited powers. The new system went far beyond this. Mr Jack asked whether this would mean there would be a single market for everything but banking. Mr Kapoor said it would, and it would then extend to other financial services. He stated:

We already have a little bit of that with the currency union, with the euro area financial markets more integrated and the rest of the whole of the European Union. But this is going to accelerate the divide, and we're going to have a two speed single market, which of course is oxymoronic.

SJ: So far, we’ve been saying, ‘Hurrah, we’re not involved in the eurozone’, but actually is that changing to, ‘Hang on a second, this could be a problem’?

SK: I think we need to seriously think exactly where we want to be headed with this, what the future of Britain in the European Union is. Because this has serious implications. On the one hand, the news out of the summit is good for the UK because this means that the euro crisis is likely to be arrested to some extent, so it’s good that the crisis is not going to spill over, but it has long-term implications for exactly how much of (word unclear) The City would be seen for European financial markets in the future, and if we are seen to be sitting outside, we will lose the relative advantage we have, and any other financial centre, particularly within the eurozone, Frankfurt for example, will be put at a relative advantage.

June 29 8.31am: James Naughtie said that EU ‘chief’ Herman Van Rompuy had described as a breakthrough a decision by EU leaders to use bailout funds to support struggling banks directly. Gavin Hewitt said Angela Merkel had made significant concessions and had allowed the bailout fund to help banks without increasing government debts. Mr Hewitt said it paid to be cautious because a lot of details needed working out, including the appointment of a single banking supervisor. He added:

but Europe's leaders have recognised for a long time that what the markets have wanted is the confidence to know what really stands behind the currency. And I think what happened last night was operating on two levels - to try to fix the short-term, trying to lower those borrowing costs for Italy and Spain, and I think that probably will happen, and then a longer term plan, plan for a much more tighter, closer economic and monetary union - which will mean countries giving up a considerable degree of sovereignty. And operating on those two levels, I think there is the possibility of increased confidence and the aim, as Herman Van Rompuy said in Brussels, was to make the euro and irreversible project. How we there yet? No, we're not, but I think a lot of what people have been calling for was delivered in the early hours of this morning.

Robert Peston said there was no doubt that Angela Merkel had mad e a massive concession and it was now clear – for example that governments would now take stakes in bust Irish banks. He said this represented a massive increase in risk, and suggested that German citizens would believe their leader had been mugged by the leaders of Italy, Spain and France. He asserted:

And it is a massive change of dynamic of the eurozone, to have Germany isolated in this way and cave. Now, in the short term, markets may breathe a sigh of relief it does look, as I say, as though Germany is prepared to take a lot more risk in helping out its neighbours, and let's also be clear, there’s another part of the statement which says that when bailing out overstretched countries, fewer conditions will be imposed on those countries that were imposed for example on Ireland and Portugal and Greece. Now, Italy are seeing this is basically an agreement that it will be able to borrow from these bailout funds and only have to stick to its current and to reduce the deficit. So again, it's a bailout for Italy with many fewer conditions being opposed. And again, this will go down, I think with many Germans like a lead balloon. This is not the sort of thing that Germans have been wanting to do.

Gavin Hewitt said that the change had happened because Spain and France and Italy had dug their heels in and said there would be no progress in other areas without change. He noted that in return, Mrs Merkel had got a single supervisory body for banks but it had been a U-turn because Germany had been forced to commit funds to risky ventures. Mr Peston said that a problem with the change was that the bailout funds were still small, so it was still just a sticking plaster.

June 29 business update 8.45am: Simon Jack said the markets had given a warm welcome to the EU agreement on banks with shares up and borrowing costs for Italy and Spain down. Helen Haworth of Credit Suisse said it was too early to judge the long-term impact of the changes, though there was relief in the short- term because some sort of agreement had been reached, against expectations. Mr Jack asked if it was good news for Irish taxpayers in that the entire country had had to take on the debts of bust banks and now that seemed to be about to change. Ms Haworth said it was a step in the right direction. She added that it was not a big defeat for Angela Merkel as it had been clear that concessions were in the pipeline.

June 30 7.21am: Evan Davis said:

We’re living on a diet of Brussels in those terms at the moment, with European summits interspersed between crises and moves towards banking union, fiscal integration and political union. It's hard to believe the British public don't listen to all of this without it affecting their views of the whole European project. Nigel Farage, leader of the UK Independence Party, has certainly been thinking about it. NIGEL FARAGE: We’ve just finished the 19th summit since David Cameron's been Prime Minister, they've made some marginal changes but in reality nothing has been solved that all. The extraordinary thing, from a British perspective, is to see David Cameron cheering them on - Cameron's the one saying, ‘You must push on to a full political union, you must abolish democracy in the nation states of the eurozone,’ and I think most people in Britain look at this and say, why on earth are we encouraging them to go down this route?

ED: Well, where is British public opinion on this topic at the moment? Peter Kellner is president of YouGov, the pollster, and joins us, good morning.

PETER KELLNER: Good morning Evan.

ED: We’ve got a European election in 2014. I'll talk about that in a moment, where do you think the British public lie on Europe at the moment and referendums and closer integration, watching the others move ahead.

PK: It’s pretty constant over the last year or two, according to our YouGov polls, Evan, most people if you ask them want a referendum, and most people who take sides on that Britain should stay in or come out say ‘come out’. It’s about 3 to 2. The other thing one should say, because I'm not sure a referendum would produce an automatic (word unclear) if you ask people, what's the most important issue facing Britain, quite a lot say Europe, 35-40%. If you ask them what matters to them in their own lives, Europe falls way down the list. So what you've got is, I think, more sense from most people that they'd like to keep the rest of the world at bay, and Europe is part of the rest of the world.

ED: Yeah, very interesting. Well, let's talk about that election in 2014, because it can often, the European elections just often act as a great protest vote, don't they? And so you could expect sceptical party, UKIP, to do incredibly well.

PK: That’s right, and indeed that's exactly what’s happened at the last European elections, when they came second with 17%. You know, from the Tory point of view, from David Cameron coming back from Brussels, here's the nightmare scenario: firstly, it's an election fought on the proportional voting system, which is good for smaller parties like UKIP, because they can win seats; secondly, it's about, it's an election about Europe, and what is UKIP about? It’s about Britain and Europe; and thirdly, like a by-election, it's a chance for unhappy Tories to cast a protest vote against their own party, safe in the knowledge they're not kicking David Cameron out of Downing Street. As things stand, Evan, if the European elections were being held next week, I would be forecasting a tight battle between Labour and UKIP for first place, with the Conservatives third, some way behind.

ED: So it's not inconceivable that UKIP could get most votes, in a European, in a national election?

PK: That’s right. Remember, in a proportional system votes go all over the place, and we could be talking about first place and say 25%, not, you know, 50 or 60%. But UKIP came second last time, and they came third the time before, you know, they’re on a trajectory where it's perfectly conceivable they could come top.

ED: Now, you said something quite interesting, you said you're not sure that despite the polls at the moment that the outs would win and in out referendum. Why the difference between what the polls say and what you think they might do in a referendum. Because, of course, that was the position, I think, in 1975, in the last referendum.

PK: That's exactly what happened. Polls taken about nine months before the 1975 referendum showed, just as polls show today, roughly 3 to 2 for leaving what was then the Common Market. And then on the referendum day itself it was a 2-to-1 majority for staying in. And what you find, and it's been consistent over 40 years, is that when Europe is not at the very front of voters’ minds, and even after the events of the last few days, it isn’t now, people are just pretty sceptical and want to hold the rest of the world at bay. When it becomes really central issue, as in the referendum or as in 1983 when Labour was campaigning on pulling out of the European Union, people pay attention, they get scared by the thought of what life would be like outside. I'm not saying it certain that we would vote in a referendum to stay in, but I don't think it would be 3 to 2 for leaving.

June 30 8.33am: Lord Lamont said he was quite sceptical about the ability of the EU to come up with the right banking regulation.

June 30 8.53am: John Humphrys said:

Big events in Europe this week, big for the future of the euro also it's hoped. Big for our relationship with the European Union? Well let's put that to Europe Minister, David Lidington, and the shadow Foreign Secretary Douglas Alexander. Mr Lidington, presumably it must be big, very important for us, because if the 17 members of the eurozone form very, very much closer ties, as they are on the point of doing, they have already done in some respects, our relationship with them is inevitably affected?

DAVID LIDINGTON: It is affected. It’s also very much in our interests that they do achieve stability in the eurozone. Roughly 40% of British trade is with the 17 countries of the eurozone, so their prosperity has an impact and hours. But I'd also say there were some really good stuff in the summit conclusions about changing the eurozone in a way that is compatible with the single market. There was good language about growth through, through cutting the cost of regulations on business, making it easier to start up new businesses in the European Union. This is the agenda David Cameron's been consistently campaigning for, and he can say he persuaded the other 26 to agree to that programme of action, in the conclusions of this summit.

JH: What a lot of people will do is look at Europe and say, rightly, this is not Europe that we joined, and therefore they will say, we want a say in what our relationship is going to be now, and many of your colleagues in Parliament, more than 100 Conservative MPs, we gather, have already said, we want that referendum. Mr Cameron seems now to be saying very, very firmly, no, no referendum?

DL: We changed the law since the new government came in 2010 to require a referendum in future if we, or future British government wanted to agree to a treaty change that would give extra powers from the United Kingdom to the institutions in Brussels. And if that had been in force at the time, the big European treaties of the last 20 years would all have been put to a referendum. And I think that new act should provide a British public with the reassurance they want. Because when I talk to businesses in my patch, John, what they tell me is that yet, they hate a lot of the regulations, the bureaucracy from Europe, they want us to negotiate hard and change those, but they also want a single market that's a real asset to Britain, they want Europe to speak together when talking to China and Brazil on trade, because we get more leverage for jobs in our country as well as in the rest of Europe, if we talk together

.JH: But to deny referendum because what's happening is not strictly speaking a new treaty, in fact, in many ways the changes that are happening are far more far-reaching than some of the treaties that have been arranged, been agreed in the past. So surely you're just kind of hiding behind the shelter, rather, saying, well, actually, it isn't to do treaty, therefore there does need to be a referendum. In fact, the changes are profound. DL: Nowhere I think, where I think the argument you're putting to me is flawed is, first that I think it oversimplifies the choice. I think what most people probably in this country want, certainly in my own experience in my constituency, is to be part of Europe, particularly with the single market, but to get rid of some of the bureaucracy and intrusiveness that characterises Europe today. And what David Cameron is showing is that we can achieve that, because there are lots of other countries who also want to say a more liberal, a more diverse Europe, where some countries can work together much more closely and intensely (words unclear due to speaking over)

JH: (speaking over) He’s not persuading your fellow MPs though, is he? That 100 MPs who are demanding a referendum?

DL: I think, I think, I think that the prime minister is showing, by what he’s actually achieving on the European scene that we get an advantage from our seat at the table . . .

JH: Alright.

DL:. . . while safeguarding crucial British interests. And there's no evidence, John, that there is this caucus of other countries that is wanting to push us into . . .

JH: Alright.

DL:. . . a corner. Talk to other ministers, that's not how they're thinking.

JH: Alright, thanks for that. Douglas Alexander, do you agree with that?

DOUGLAS ALEXANDER: Well, I think it's fair to say that despite some limited progress, some welcome progress that we saw over the weekend, the character and shape of Europe in the future remains very much an open question. For those calling for a referendum irrespective of the transfer of powers, because I do agree that, as the law now stands, if there is a transfer of sovereignty from Britain to Brussels that alone would trigger a referendum. On the general question of, irrespective of the transfer of powers, should there be an ‘in out’ referendum, I don't think that that is a decision that we could or should sensibly make now. And let me explain why. We can't decide now, because none of us can fully predict where Europe will be in a few months, never mind in a few years’ time, and it's far from clear today what we would be asking to stay inside, or indeed, what we would be risking being outside.

JH: But what we would be saying, what is inevitable, whatever the details are finally emerge, whatever the final arrangements are, Europe is a very, very . . . is going to be, is already, very, very different place, very different institution from that which we joined. Shouldn't people be allowed to express a view one way or another on that? And I appreciate the final question is a difficult one.

DA: Well it’s fair to say that Europe is, if you like, suffering an existential crisis and that’s been revealed in recent years. But there are fundamental questions that we simply don't have the answers to now, as to what will emerge following the crisis. Will the changes bring a return to protectionism, even within the single market? Will the changes, the deepening of the eurozone, see Britain consistently outvoted on matters that affect our interests or will that scenario be avoided? Will the Commission, that have historically seen its job as being protecting 27, changing its character to be essentially a creature of the eurozone? We simply don't know the answer to any of those questions, and I think once the character of that post-crisis Europe emerges, then we will have a much clearer . . .

JH: Right.

DA: . . . line of sight in terms of Britain’s relationship with Europe.