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DERMOT MURNAGHAN: Now then, the deal agreed last week on Greece’s debt must have come as some relief to EU leaders but it’s only a four month extension  of the financial rescue package so is the European economy out of the woods?  Well I’m joined now with his thoughts by the former Chancellor to the Exchequer, Lord Lamont, a very good morning to you Lord Lamont.  I’m going to wheel out that much used phrase again on this, is it kicking the can down the road yet again this deal or are they getting closer to something of a solution that will hold?

LORD LAMONT: No, I think this is very provisional.  There are two big hurdles, firstly tomorrow they have to come back, the Greeks, with a list of reforms that they have agreed to and this is an enormous climb-down by them.  Then if that is accepted they have four months during which time they will put forward their proposals for a renegotiation of the debt which may not be accepted at all so you could have a crisis tomorrow, although I think they’ll probably get through that, but of course the whole thing could happen again in four months’ time, there is no guarantee and, of course, whatever is agreed has to be sold to the Greek public and to the party, Syriza, which is in government and of course if a deal is agreed it has to be sold to the German public.  So there are so many moving parts in this.  

DM: And the Dutch and the rest of it but is the issue here fundamentally the eurozone itself?  I mean one thing unites them in these negotiations is the desire, from the Greek point of view, to stay within the euro and from the German point of view for the Greeks to stay within it too.

LORD LAMONT: Well I’m not sure the Germans do want them to stay in.  I noticed how Mr Schäuble, the German Finance Minister, almost rubbing his hands, said they’ll have difficulty in selling this to their party, almost rubbing their noses in it and I heard from a very well placed senior official in Brussels over the weekend that Schäuble had not wanted the Greeks to apply for an extension to their loan, their bail out, he had rather they hadn’t climbed down but what that meant is that he had rather they had just walked away and the whole thing had collapsed.  

DM: Do you really think or could that just be brinkmanship?  I mean it’s just such an unknown quantity if the Greeks left the euro, it’s been said it could be the currency version of Lehman Brothers, this could detonate a financial and economic bomb.  

LORD LAMONT: Well the argument against that, I’m not saying I believe this, but the argument against that is that Greece’s creditors are all now replaced by government bodies, there are not many private creditors left so the people who take a hit if Greece left are the bail-out funds, the ECB, other eurozone governments and the IMF of course but the argument against that argument is you can’t really tell what the consequences are going to be in Portugal, in Spain and in Italy.  Even if there’s no immediate knock-on effect, next time there’s a eurozone crisis – and who would bet against there not being another eurozone crisis? – people are immediately going to say, well are they going to leave this time if Greece has already left?  Once one leaves the next time you have a crisis with another country, people will say well is it going to leave and that will have a knock-on effect.  

DM: What are the opportunities and dangers for Britain within all this?  One of the dangers is it’s obvious if the eurozone falls apart and there is another recession on the continent, our biggest trading partner, but politically if Mr Cameron is re-elected has to renegotiate the terms of its membership of the European Union with the Germans facing towards Greece, facing towards Ukraine.  Would they regard that as a distraction or would they regard it, the Germans, say okay, we’ll listen to you from the UK because you are one of our key allies within the European Union?

LORD LAMONT: Well I think the Germans will be more prepared than some to listen to what Britain would want from the renegotiation because, well for two reasons.  One, Britain is a natural ally of the Germans on a lot of economic issues, have similar attitudes.  Secondly, and never underestimate this, if Britain leaves the EU that is quite a dent to the credibility when the second largest economy within the EU suddenly decides we don’t want anything to do with this.  They don’t really want that so we’ve got more negotiating cards than we may think.  

DM: And can I just ask you lastly, Lord Lamont, this whole issue of aggressive tax avoidance, is there the possibility of getting, let’s say more catch-all legislation that just makes it very clear to rich individuals and indeed to big corporations that aggressive tax, planning aggressive tax avoidance or whatever you want to call it, will be deemed to be unacceptable?

LORD LAMONT: Well I think the Revenue are always trying to hunt down aggressive tax planning but of course what is aggressive and what is not aggressive?  That is a very grey line and a difficult area to be absolutely firm about and what has to be acted against is illegal evasion, that has to be acted against.  The trouble is we have so many clever accountants around these days, they are always devising clever ways around laws and then the Revenue has to make the laws ever more complicated.  

DM: But your budgets more than 20 years ago, I remember you talking about it, I used to listen intently to them as I do to all budgets of course, but it’s a bit like nailing a jelly to the wall though isn’t it?  That’s what you are describing here isn’t it, these are multi-national companies who have huge assets all around the planet.  

LORD LAMONT: Well I think it is also rich individuals and of course we have the curious phenomenon of the non-dom in this country and on the one hand you can say the non-doms bring in money to this country, spend money here, that has an effect on the economy.  On the other hand a lot of their income worldwide goes untaxed.   

DM: Okay, Lord Lamont, thank you very indeed, very good to key in to some of your expertise and experience there.  Lord Lamont, the former Chancellor of the Exchequer.