Phil Bennion MEP launched his 'mortgage' plan after talks at the European Central Bank's hq in Frankfurt last week

Phil Bennion MEPResponding to questions from Black Country business leaders about the effect of Greek election results, Lib Dem Euro MP Dr Phil Bennion has suggested a 25 year low interest 'mortgage' as the best way to help Greece and other troubled eurozone economies to recover.

Phll Bennion, an economics expert who played a leading role on the LibDem's national policy committee to develop their policy to cut income tax thresholds, will float his idea in an article for the party's national newspaper Liberal Demcrat News this week.

His move follows a visit by a him and a number of other MEPs for talks at the European Central Bank's headquarters in Frankfurt.

Phil Bennion said: "The victory for moderate pro-EU parties in the Greek election results is good news for exporting business in the West Midlands and generally and will be greeted with a wave of relief.

"However, it does not equate to resolving the euro crisis. For this we need the combination of an effective and certain means of cutting sovereign debt, to supplement the so-called 'Six-pack' measures and also a clear monetary authority for the Euro.

"The Greek election result averts the immediate possibility of a turn for the worse, though clearly the challenge facing a new coalition government to meet the bail-out conditions remains enormous.

"Greek businesses have been finding it difficult to function recently as they have sometimes needed to turn up with cash in hand to buy their supplies, due to the lack of confidence in extending credit lines. But despite this it is important to stress that Greece is now very close to a primary fiscal balance, meaning that it could balance its budget if it didn't have interest to pay.

"My own view is that minimising the interest burden on the so-called PIGS (Portugal, Ireland, Greece, Spain) should be the ECB's focus in getting to grips with the crisis.

"Why not roll over their debts at lower interest rates than currently on offer? Maybe 1.5% for instance, with a repayment schedule over 25 years embedded in the agreement, similar to a mortgage. This would not be a crippling burden but a manageable long term repayment agreement, rather like US Marshall Aid was for Western Europe's shattered economies after 1945.

"It was clear when we met the ECB in Frankfurt last week that they still suffer from inflation paranoia and only see quantitative easing as a remedy for actual deflation.

"The increase in the money supply in a scheme like this would only amount to the level of loan subsidy involved and would be countered by a more certainmeans of debt reduction.

"The election result might not produce a big rally in share prices but it should certainly mean that confidence in export business with Greece should improve. Any move back towards normality will ease international business deals between Greece and Britain and other member states, helping businesses across the whole of Europe."


Note: Dr Bennion, a farmer and economics expert, is the Lib Dem MEP for the West Midlands and a member of the Employment Committee in the European Parliament.