|Previous Section||Home Page|
Column 402Even the Tories cannot pretend that that has nothing to do with the deepening social divisions in Britain and the fragmentation of social cohesion resulting from their free market theories, which leave far too many people looking after number one. That opens the way for the illicit drugs industry and allows far too many people to be tempted to make more in crime--as they can--than from legitimate employment, with far too little prospect of being caught and convicted. People are deeply worried about social fragmentation, unfairness and division. There can be little doubt that Britain is deeply divided. As Labour Members have been saying for a long time and as the Institute for Fiscal Studies showed yesterday, Conservative tax policies have thrown fairness out of the window. Middle and lower-income Britain is paying a high price for the failures of the 1980s. The Financial Secretary dubbed it the yuppie revolution but, as he said last year, it was "built on sand". As a result of the Government's tax policies, the top 1 per cent. of income earners have received 30 per cent. of the income tax cuts since 1979, but are paying only 4 per cent. of the tax rises being imposed.
Mr. Dorrell : The hon. Gentleman might also like to refer to the fact that the top 10 per cent. of taxpayers are now producing 45 per cent. of the yield of income tax, whereas when Dennis Healey left office they were producing only 35 per cent.
Mr. Smith : I notice that the Financial Secretary did not challenge my case, which concerned the fairness and the unfairness of the top 1 per cent. receiving 30 per cent. of income tax cuts but paying only 4 per cent. of the rises.
In place of Conservative promises before the election not to extend value added tax and to achieve year-on-year cuts in taxation, people are faced with the unfairness of VAT on domestic fuel and the prospect of year-on- year tax increases. Page 23 of the Budget report that we are invited to approve tonight shows year-on-year increases in the share of national income going on taxation, rising to 38.5 per cent.--a higher tax take than in any year of any Labour government, which destroys once and for all Conservative claims to be a party of low taxation.
The Conservatives have added to the indirect tax burden. A typical family on average earnings pays 13 per cent. of its earnings on indirect tax, compared to 11.3 per cent. in 1978-79. The Conservatives have also added to the direct tax burden so that that same family pays 21.9 per cent. of its earnings in direct tax, compared with 20.9 per cent. in 1978-79.
Mr. Andrew Rowe (Mid-Kent) : The implication of the picture that the hon. Gentleman is painting is that mainland Europe's success in social cohesion, taxation policy and so forth has a direct, lasting and beneficial effect on unemployment. Will he confirm that the unemployment record of most of the countries of mainland Europe compares very unfavourably with the record in this country?
Mr. Smith : If the hon. Gentleman studies the period that I was examining--I think that the Financial Secretary believes that it is right to study a long period of time--works out how many periods of growth and recession there were during that time and their extent and compares them with the record of each of those other countries, he will
Column 403realise what an abysmal record the Government have. They have diminished the opportunities and prosperity of the people of this country.
The tax burdens that I mentioned are the effects of the Government's incompetence at managing the economy, which is matched in scale only by the extent of their broken election promises. Their failures make Britain weaker, more demoralised and more divided. Conservative Members too are certainly demoralised, and no wonder. On 22 January the Financial Secretary gave a keynote speech, which was intended, I dare say, to propel left-wing Conservatism into the next century. So replete was it with references to social obligation, the importance of public service and the rejection of jingoism that it could not, by any stretch of the imagination, have been given at last year's flag-waving Conservative conference. It did not register so much as an attack upon the Labour party as, perhaps, a putative application for membership. [Interruption.] For the benefit of the Financial Secretary, I repeat : not so much an attack on the Labour party as a putative application for membership.
It is quite clear that the people whom the Financial Secretary had in his sights when he made that speech were very much closer to home. Let me give an illustration. The Financial Secretary said : "Patriotism--like freedom-- is a much-abused concept. The Conservative is well aware of the dangers and rejects the exaggerated histrionics of flag-waving nationalists. They offer symbols in place of substance--a cheap imitation of the real thing."
I wonder to whom that could have been referring. [Interruption.] I hear someone ask "Where is he?" Where indeed?
But it gets better. Whom could the hon. Gentleman have had in mind when he said :
"Furthermore, the Conservative will reject a narrow, inward-looking view of patriotism. Love of country does not imply hostility to foreigners."
Let him tell that to the Chief Secretary and to the noble Lord Tebbit.
"European institutions do not represent a threat to our national identity or our national interests."
It is difficult to imagine those words escaping from the mouth of the Chief Secretary, even in an unguarded moment.
It is abundantly clear that, in the House and in the country, there are real divisions between the right and the left of the Conservative party. The former says that, with the long-term weakness of the economy, we should cut public services further so that we may move towards a more balanced budget and return to cutting taxes on the very rich. The latter says that, with the economic failures we face, the Government need to raise taxes so that they may inflict a bit less damage on public services.
The Financial Secretary and the Chancellor have referred to the quality of public services. They must mean that they want a bit less damage than their hon. Friends on the right want. Both groups contrast with the Labour party, which says, "Let's put in place the measures for economic
Column 404success so that we may help to make people better off and provide them with better public services and a fairer distribution of taxes."
The sections of the Budget report that we are considering tonight offer no basis for sustainable success. They hold in prospect no means of getting Britain to pull together for jobs, no restoration of the social fabric, no end to decline. They are measures that the Government should be ashamed to send to Brussels, let alone put before the British people. They should be rejected, and we shall vote against them tonight.
Mr. Bernard Jenkin (Colchester, North) : When Labour Members forced the Government to accept the amendment that led to this debate, Conservative Members had the vague idea that they meant to do something constructive with the debate on the Government's convergence plans. But they obviously just wanted an insurance policy. They know that their procedural expertise is a little lacking from time to time, so they wanted an extra opportunity to have the same old familiar, boring rant that we have heard several times already on this subject.
When one of the biggest issues in British politics--how Britain should conduct itself in the debate on European monetary union--is under discussion, it is disappointing that the hon. Member for Oxford, East (Mr. Smith) should studiously avoid saying anything of consequence on the subject. Moreover, we are united in our total perplexity at the fact that the Labour party has only just discovered that taxation can check economic recovery. It is a remarkable thing for Labour Members to learn. They obviously did not know it at the last general election.
When the hon. Member for Oxford, East talks of social protection, he means his union friends in work, rather than those who are out of work. The best social protection that any economy can offer its people is a job. We are absolutely united on the fact that we now have falling unemployment, lower unemployment than the EC average and are leading the European Community in the jobs stakes.
On social cohesion, let us look at some of the socialist Governments running other European countries. Prime Minister Balladur is having to cope with chaos and dislocation in France ; Spain is suffering from more than 20 per cent. unemployment ; and there is almost total chaos in Italy. If one is looking for social cohesion, one need look no further than this country as a good example of social protection, jobs and economic success.
Sir Teddy Taylor : Apart from the brilliance of Ministers, of which we are all aware, does not my hon. Friend think that Britain's splendid achievement within Europe may be because we were chucked out of the exchange rate mechanism, unlike the others?
Mr. Jenkin : My hon. Friend leads me to my next point. Part of the ingredient of our success in achieving falling unemployment is the fact that we were thrown out of the exchange rate mechanism. I use the words "thrown out" advisedly because they were used by the former Chancellor, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). We were then able to pursue policies that were in this country's interests and to set the economic agenda according to our domestic monetary
Column 405conditions, not according to an external discipline that had become inappropriate for the circumstances in which we found ourselves. That important point is pertinent to this debate which, I remind the hon. Member for Oxford, East, is meant to be about convergence. Why do we want convergence? What is so axiomatically good about it? Our economy has improved markedly since we made a conscious decision to let it diverge from those of our European partners. The treaty on European union contains an obligation to converge, which has been put there for political rather than economic reasons. People have a political agenda that they want to achieve in Europe and the economy is the tool with which they want to achieve it.
Amendment (a), tabled in the name of the Leader of the Opposition, talks of many supposed failings in the Government's economic policies. But if the Opposition were ever in government and took us into a single currency-- their espoused policy--and did away with the opt-out which the Prime Minister attempted to negotiate at Maastricht, they would abolish the very means to deal with the problems which they think they can cope with better.
Mr. Rowe : I am grateful to my hon. Friend, who is making an intelligent and helpful speech. Does he agree that, while there are manifest short-term economic advantages in our being divergent from the present state of Europe, in the long term, political differences throw all economic advance off course? That has been demonstrated at least twice this century--between 1914 and 1918 and between 1939 and 1945. It makes a great deal of sense to have the twin track of a political and an economic agenda.
Mr. Jenkin : I agree that we need a twin-track agenda to ensure that we have a strong defence policy, coupled with clear foreign, economic and trade policies that bind us together. But it is trade that binds the interests of our nations together. The causes of both the first and second world wars were as much about protectionism as anything else.
To impose a single currency upon the diverse nations in Europe is a different proposition. In imposing a single currency, one imposes a uniform economic discipline, but the political characteristics of each of the member states are very different. They have their own priorities, geographical characteristics and trading partners. France tends to trade with French-speaking countries, Britain tends to trade with English- speaking countries. A single currency does not automatically lead to the cohesion of Europe.
Mr. Iain Duncan Smith (Chingford) : Will my hon. Friend consider convergence in relation to a single currency? We do not necessarily have to pursue convergence. We could allow countries that naturally converge to do so and adopt a multi-speed approach to the concept of a single currency, rather than following the politically dominated, forced agenda, which is essentially part of the treaty.
Mr. Jenkin : My hon. Friend is right, and he directs me to the subject that I wanted to raise : the definition of convergence. Many of my hon. Friends think that convergence means having less than 3 per cent. public sector deficit and less than 60 per cent. public debt ratio,
Column 406low inflation and low long-term interest rates. Those are not articles of convergence, but four objectives that politicians have decided it would be interesting to achieve.
Convergence under a single currency would require imposing the same monetary policy and the same interest rates regardless of the circumstances in each of the member states. In the United States, where there is a single currency, there is a single interest rate, and a single financial, fiscal and monetary discipline. But that does not solve the problems of economic divergence in the United States. When the motor industry in Chicago and Detroit is booming, oil in Texas can be bust and silicon chips booming in California. One has to have massive fiscal transfers to pay for the discrepancies between the different parts of the economic unit.
The United Kingdom has a single currecy, but a widely divergent economic performance. We must pay for wide disparities in public expenditure--which is 18 per cent. per head higher in Scotland and 41 per cent. higher in Northern Ireland--to maintain a cohesive economic unit. [ Hon. Members : -- "Why?"] Because we care about our country, that's why. How much more would we have to pay in taxes to maintain cohesion and convergence between all the various member states of the Community, given all the economic differences between them?
Mr. Ian Taylor (Esher) : My hon. Friend is becoming so obsessed with the prospect of a single currency--to which Maastricht does not commit this country--that he forgets that the Maastricht convergence criteria actually constitute rather good Tory principles of public finance management. In the event that other countries observe them better than we do, given that the European Community is a single capital market, there will be fairly massive transfers that will not benefit this country.
Mr. Jenkin : First, the treaty on European union obliges us to converge in the run-up to a single currency. Secondly, if it is virtuous to have a 3 per cent. public sector deficit ratio, why have we not had one for the past few years? The Maastricht treaty was negotiated at the end of 1991.
The answer is that this country decided that it was politically expedient-- and, indeed, beneficial to its economy--to run rather a large deficit. We decided to make that political choice. We would like to run a balanced budget ; we would like to run a surplus. But it is for the House and the Government--both accountable to the British people--to decide what is best ; it is not for the European Commission, in its wisdom, to decide when and how we should apply the convergence criteria.
If we are talking about convergence, I urge my hon. Friend the Member for Esher (Mr. Taylor) to read the treaty. It is about multilateral surveillance ; it is about being told off by the Commission, not when we in this House think action is inappropriate but when the Commission thinks it is. My hon. Friend is committed to the idea of convergence and a single currency for a political reason ; his is a political objective. I am as internationalist as he is, but we choose to achieve our aims in different ways.
Column 407because we remained in the exchange rate mechanism for an intolerably long time, the cost of social security payments and housing benefits, and a range of additional public expenditure, was heaped on the British people ? Consequently, we are in the economic mess represented by the Red Book that we have before us.
I have made my argument as clear as possible. The pursuit of convergence is a very expensive business : that is why there are structural and cohesion funds. We must pay for convergence, and it is the northern states that will have to slow down their economic growth to pay for disparities throughout the European Community. I shall vote for the report, because I voted for the Budget ; but the fact of its submission proves that monetary union is still happening. The idea that it has been stopped in its tracks by the collapse of the initial strategy must be discounted. The documents are beginning to flood out of the Commission. The strict convergence criteria were meant by some to make sure that monetary union never took place, but now the criteria turn out to be a little more malleable than we had thought. The goalposts are being moved. The two documents about legislation on convergence--it is interesting to note that the treaty is giving rise to draft legislation on that already--try to define the 3 per cent. borrowing ratio and the 60 per cent. public debt ratio, because each country has a different definition of these elements. Goodness only knows how the Italians and Greeks define them. No figures for previous years' performance is offered in the documents.
Mr. Jenkin : As my hon. and learned Friend says, they do. The Commission has a clear agenda and is starting to manipulate these definitions for its own purposes so that it can move back towards economic and monetary union, with all the expense that convergence implies.
Conservative Members can unite behind the agenda articulated by my right hon. Friend the Prime Minister in his article in The Economist of 20 September :
"All over Europe, what are people worrying about? Not to reduce the number of currencies but to increase the number of jobs." I commend that comment to the Minister.
Sir Teddy Taylor (Southend, East) : The Minister is a superbly conscientious man when offering assurances to the House. I hope tonight that before he gives us any more reassurances he will reflect on some of the others that the House has been given recently. We were told in the debates on the exchange rate mechanism that it would bring growth and stability ; we all know that it brought about a shambles. Last year, we were told that the general agreement on tariffs and trade round would lead to a great reform of the common agricultural policy ; now we are throwing so much money at the farmers that they are positively embarrassed by it.
Column 408Something significant is happening tonight. For the first time in our history, we are going to submit our Budget plans and forecasts to the Commission, so that the Council can look at them and in turn tell us its thoughts on what we and others are doing. It will demand a great deal of information. It will monitor economic developments in each member state, carry out regular assessments and suggest detailed rules and recommendations.
All these recommendations will be directed to what the Commission thinks is the answer to our problems--to aim at this 3 per cent. figure. I know that Britain is doing terribly well compared with the other member states, but that is because we were thrown out of the ERM. The Minister, I know, is sometimes a little suspicious of our figures, so I took the trouble to get some independent figures from the Library. The Library informs me that if Britain adopted the 3 per cent. rule here and now--the basis of the EC's proposals--income tax would be increased by 23p in the pound. If the Minister did not like that he could, alternatively, impose VAT on everything at 34 per cent.
Mr. Dorrell : I thank my hon. Friend for that research. As he will know, however, because he is an assiduous reader of the documents, a proper reading of the excessive deficit provisions of the treaty shows that they do not require the United Kingdom or any other state to secure the 3 per cent. overnight. The treaty obliges us to endeavour to avoid excessive deficits, which it defines as 3 per cent. of GDP.
The document before the House outlines how the Government, chiefly for our own domestic reasons, do intend to reduce our public sector borrowing requirement to below 3 per cent. The Red Book shows that we will achieve that objective in 1996-97. I am sure that my hon. Friend, for reasons on which we both agree, will support the Government in delivering that objective. No suggestion is made in the treaty or elsewhere that we should seek to do that overnight.
Sir Teddy Taylor : I am terribly sorry, but I have read what article 104C says about 3 per cent. These are specific aims. In fairness, Britain can receive only recommendations, strong letters and instructions, but if other member states do not do what they are told they can be fined, asked to put unlimited sums on deposit at no interest and have the facilities of the European investment bank withdrawn.
The Minister said that this does not have to be done overnight. That is perfectly true--as long as we can give a tale to the Commission and to the Council and can say, "We are terribly sorry that we are above 3 per cent. but here are our plans to reduce it."
Mr. Budgen : Not only can we be subject to such criticism and blackmail from our foreign governors but we are also likely to have great difficulty in raising money on international markets if we have been subject to an adverse report from what many people regard as people who control large sums of foreign money.
Sir Teddy Taylor : How right my hon. Friend is. Reports will be published in which the Council and Commission will say, "We think that the Government are making a mess of things." We would know that that is untrue. We know that we have brilliant Treasury Ministers who are doing a fantastic job. I am sure that the same would apply to all Governments, but if the Commission
Column 409says, "We think that the Government are heading for disaster because they are borrowing far too much money and their economic policies are crazy," what effect will that have on our stability as a nation and on how people regard us?
Mr. Peter Hardy (Wentworth) : I do not wish to use the same pejorative words as the hon. Member for Wolverhampton, South-West (Mr. Budgen), but if the EC wishes Britain to converge, is it not reasonable to expect the Commission to assist Britain to do so? Does the hon. Gentleman believe that Britain is so assisted if the Commission allows the continuation of the situation in my area, where there is enormous anxiety about the survival of probably the finest engineering steel works in Europe, if not the world?
They are likely to be taken out because the Governments of Germany and Spain are determined to subsidise their industries to destroy British competition. Does the hon. Gentleman understand that, if the Commission does not help us, the possibility of convergence is made more difficult, and the effect on public expenditure of the destruction of a successful British industry makes the situation that Britain, and presumably South Yorkshire, faces a bitter one?
Sir Teddy Taylor : I am well aware of the terrible problems facing the steel industry in south Yorkshire. Everyone is aware of the problems facing Britain. I ask the hon. Gentleman please to go and look at what the Council and the Commission have done. They have given permission for extra subsidies and the expansion of steel works in other countries on condition that we clobber ourselves. Do not blame the Government. The fact is that Europe is killing our steel industry, and the hon. Member for Wentworth (Mr. Hardy) knows that. We have seen it happening and it is getting worse. For him to blame Tories, Labour or Liberals is a load of codswallop. Our steel industry is being deliberately killed because we are allowing extra subsidies and extra capacity in certain member states.
The Minister said that we do not have to increase VAT to 30 per cent. immediately. He said that the Commission will be kind. It will say, "As long as you are going the right way we will go along with you." I ask him to look at other member states of the EC. Are they going the right way with their borrowing? Every single figure shows that the massive borrowing of EC countries, but not Britain, is getting worse almost every day.
I ask the Minister to read today's edition of that splendid newspaper The Guardian, which reports that Germany now has more than 4 million unemployed and that the total went up by 340,000 last month. What will be the impact of that increase on Germany's overspending and borrowing? The same is happening in Spain and Italy. I mentioned our excessive problem, but in Greece the figure is 15.4 per cent. It is my calculation, not the Library's, that if we had to conform to the 3 per cent. target, we should be required to increase income tax to 23s 4d in the pound, which would be difficult to maintain.
Mr. Cash : Does my hon. Friend recollect that in Spain, despite the vast amounts made available to it in the form of subsidies--including the £108 billion over the next few years that was agreed at Edinburgh in 1992 under our
Column 410presidency--37 per cent. of all people under the age of 25 are unemployed? That is why Spain has a general strike. It is an indictment of the way in which the Community is going, and what is happening in Germany will happen in this country.
Sir Teddy Taylor : My hon. Friend is absolutely right. The Minister is a sensible chap and I appeal to him to consider what the EC is doing to its member states. He should not listen to the Foreign Office chaps but should examine the figures. Spain has mass unemployment despite mass aid. Costs to industry and commerce are increasing and Europe is unable to compete because of the crazy CAP and trade protection. Massive borrowing is also a factor in Europe's problems.
The House is well aware that things are going well in Britain, but what about interest rates? When considering convergence, the Minister should examine the figures for borrowing among the European member states and my hon. Friend the Member for Harrow, West (Mr. Dykes) should examine the European investment bank. The main sources of loans are the Arab countries which, sadly, do not have so much money now because of the price of oil-- even the Saudis are paying their debts in instalments--and the Japanese, who are lending less. Unfortunately, the ever-increasing borrowing will soon meet non-available lending, which will have a pretty devastating effect on interest rates in Europe.
Please, will the Minister let himself be told what is happening? We tabled an amendment asking that the House of Commons be told what instructions or advice is given to member states. [Interruption.] If my hon. Friend the Member for Harrow, West cares to listen, I recommend that he read paragraph 9 on page 20 of the treaty which states that the Commission will tell the Government what it thinks they should do but that it will not tell anyone else. Communication will be secret and private. If Britain is to be told what to do, surely the Government should at least inform the House. Is that asking too much?
If the Minister has to proceed with what I believe to be another lunatic Euro-plan which will create more unemployment, misery and problems, I hope that he will at least promise to inform the House of any instructions or advice given by the EC to the Treasury. If other member states are told that fines are to be imposed and that they have to deposit money, why should not the Government tell us that, too?
Article 103 of the treaty states that economic policy is now of common concern. I therefore appreciate the fact that the control by the House of economic policy is being taken away, bit by bit. It is disappearing, as is our control of other matters that we used to decide for ourselves. We should at least have the right to be told what is happening. The Minister should reflect on the 250,000 people who lost their jobs because of the criminal decision to join the exchange rate mechanism and on the fact that the Government told us that the treaty would bring growth and stability. Despite the additional transfer of power and the mad 3 per cent. policy, which can never work across Europe, I hope that he will tell the House when he receives secret advice on a bit of paper from the Council or the Commission.
Is it wrong to say that we should be told what is happening? That is all that the amendment asks. As the Foreign Secretary, who is someone who wants to tell everyone everything, is sitting on the Front Bench, I hope
Column 411that we shall be given the assurance that, when the private secret letters come he will tell the House, so that not only the Labour party and the Conservative party but, most important, the people of Britain know what is going on.
Mr. Mike Gapes (Ilford, South) : I had not intended to speak in the debate, because I did not want to intrude on the private grief of the Conservatives. However, having heard some of what Conservative Members have said, I felt that it might be helpful if someone made a contribution that at least drew attention to the reality of what is happening in Europe rather than to the peculiar obsession of the anti-European wing of the Conservative party.
European economies are becoming more integrated every day. Multinational companies are buying plants in other countries, in some cases with the support of those countries' Governments and in other cases against their wishes. That integration will continue regardless of whether this country is in the exchange rate mechanism, and regardless of whether there is a single European currency. As that process continues, we in this country can be bystanders or we can be part of trying to shape the structures, organisations and institutions of the Europe that is being created. Unfortunately, our Government have chosen to be bystanders and to opt out of that process, but we shall still have the opportunity over the next decade to take our place in influencing those decisions. If we examine what the Maastricht treaty really says we realise that, regardless of whether the timetable is kept to, it is possible and even likely that by 1999 a substantial minority, perhaps even a majority, of the member countries will go forward to establish some kind of single currency.
Many people will say, "That does not matter to us. We are not influenced by it, and they can do it if they want. We want a two-speed Europe." But if our economy is to be dominated by the largest country in the European Union, with its power, its strength and its deutschmark zone, which will influence the policies of BMW and the other companies that want to invest and to build export markets outside the European Union, and if we say that we do not want any influence on that process, we should have to be strong enough outside on our own.
Mr. Jenkin rose --
Mr. Duncan Smith rose --
We should have to be strong enough to resist those pressures. Our economy is already very weak, which is why our Government seem prepared to accept investment from anywhere, regardless of its long-term technological and industrial consequences, even if it is used to purchase the last remnants of the British motor vehicle industry.
The logic of the position of those who want to opt out and stay out is that we shall become, on the one hand, a kind of subcontractor, producing on the periphery of the European economy--the deutschmark economy--and, on the other, a kind of amusement park for American and Japanese tourists. That is the logic of the Government's policies, which will leave us with no manufacturing base or jobs and no industrial future. We must face that reality.
Column 412united Germany, we are not left behind by Germany. On the contrary, the Bundesbank does 60 per cent. of its bond trading and 90 per cent. of its foreign exchange dealing in London. We need be no more left behind if we stay outside the single currency than Hong Kong is left behind by China.
Mr. Gapes : That is an interesting parallel. Hong Kong is about to be unified with China in 1997 and lose its unique position. Germany has just gone through the most traumatic process of unification. It has also taken huge numbers of German refugees from central and eastern Europe and refugees from the former Soviet Union. Also, it has been recently reported that the east German economy is growing. The east German employment rate is no longer the major problem. The major problem it faces is the adjustment to the west German economy and to the process of the west European economy.
I suspect that in five or 10 years' time, the 80 million-strong Germany will be a powerful, united economy. No other former Warsaw pact or former COMECON country is in anywhere near the same shape, despite the fact that they have not had the serious problems with which the German economy has had to deal.
The basic position of that German economy is far stronger than the British economy. If we had had to take 5 million or 6 million people from Hong Kong and had had to deal with unification with a backward economy which had been run down over many years, the British economy would not have been able to cope. The Germans are having great difficulty, but I have no doubt that, in future, they will emerge in a much better position than Britain, France or any other west European country could possibly have managed.
It is a myth to say that the German economy is falling apart and that it is in terrible trouble. It has difficulties with unification, but it is coming through it.
In 1999, the German economy will be the motor force behind some sort of single European currency. When I spoke a few weeks ago to five Christian Democrat Members of Parliament--from the sister party of the British Conservatives in the European People's party--they told me and my hon. Friend the Member for Gateshead (Ms Quin) that the policies of the British Labour party were much closer to their policies than those of their supposed friends in the Conservative party. [Interruption.] They said that they believed that they could work with us in government, but that they would have great difficulties working with the British Conservatives.
A few days ago, I met some French politicians, led by Giscard D'Estaing, who were meeting members of the Select Committee on Foreign Affairs. They made it clear that the French, including the Gaullists, the socialists and UDF members, saw moves towards economic and monetary union and a single currency as going ahead. That is despite the referendum in France. They attributed the