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Mr. Nicholas Winterton (Macclesfield): Will my right hon. Friend give way?
Sir Terence Higgins: No. I have only 10 minutes.
I should like to pick up on one of the arguments used last week by my right hon. Friend the Member for Wokingham (Mr. Redwood), who is in favour of holding a referendum. It is inevitable that such a referendum would be preceded by a major campaign on the issue.The result cannot be binding on the House, because, at the end of the day, it will decide what happens, whatever the result of that referendum. The crucial point is that the result will be binding on the Government, who will have analysed carefully all the arguments, discussed them in great depth and put forward their case.
What happens if the result of the referendum goes against their views? If I understood my right hon. Friend the Member for Wokingham correctly, he suggested that the Government would simply have to accept the result of the referendum. That seems completely absurd. The Government could not campaign on one argument, lose the referendum and then say, "We have suddenly decided that all the arguments we put forward were wrong. We will change our mind." In the circumstances, the Government could do only one possible thing--resign. That is what would happen. Before opting for a referendum we need to consider carefully the implications. I could deploy other arguments against the use of the referendum, but I do not have time.
I should like to dwell on the single currency, about which I am extremely sceptical. I do not think a single currency will be introduced even across the existing European Union by the next general election, the one after that or even the one after that. What may happen is that a core currency will be created, effectively a deutschmark bloc. If a referendum were held, the relevant question would not be, "Do you want to join a single currency?" but, "Do you want to join a deutschmark bloc?" I am very doubtful whether it would be in the interests of this country to join such a bloc. It would create a situation in which the Union would cease to be a Union because in an essential respect there would be a difference between the inner core and the others. In that sense, the Union would be fragmented.
It is not just the single currency and the possible fragmentation of the Union that are dangerous, but the speed and passion with which other EU countries and this country are pushing forward on the convergence criteria.
The fundamental aim is to reduce Government deficits, and that policy is deflationary. What we are witnessing across Europe is a conspiracy to deflate. That policy has not been dictated by any normal reason of economic management given the state of the economic cycle in this country or another.
It appears that countries are determined to rush forward, according to a tight timetable, to meet a requirement to reduce their deficits. The welfare and unemployment implications would be extremely serious. That needs to be taken into account.
I noticed a short time ago that Mr. Lamfalussy, the president of the European Monetary Institute, was reported as rejecting
I believe that the drive for European monetary union is in danger of causing a Europe-wide recession. That is an extremely dangerous situation, which one should consider carefully.
The urge is to meet the criteria at a specific moment in time. The idea is that we will say, "Goodness, we have managed to meet the convergence criteria. 'Snap!' We will join." Total disregard will be paid to whether the country is in any sense in economic equilibrium. If a country joined the single currency, it would give up for all time the major means of adjusting for differential movements in prices and costs. That would have the consequence of endemic unemployment, and the need for subsidies across national boundaries within the Community. It may be that a country would be totally unconverged; all that it would have managed to achieve would be a false convergence at a particular moment in time.
If that happens and two or three countries or more were to join a single currency, the danger to the future economic prosperity of Europe would be great. Whatever the jargon--two-tier, two-speed--a drive towards a single currency would certainly not create a European Union. One would have the "ins" and the "outs". I believe it may be better to be out rather than in the inner core.
About four months ago, the National Institute of Economic and Social Research published a good report on that very problem in its journal. It is a complicated issue, and the idea that the public understands it is just not so. That is why any such decision on a single currency should be taken in the House of Commons. We need to analyse all the factors involved and, in particular, the Select Committees need to analyse them before we move forward on the single currency.
Many proposals in the White Paper deserve comment, but in the time available, I shall refer to one. On page 11, it proposes
Mr. Roger Berry (Kingswood):
I am one of those who supports many European proposals. I support action to protect the environment, to tackle discrimination at work and to improve employment practices. I am, however, opposed to the deflationary economics of Maastricht.For some people that appears to be an odd position to take. There are those who think that, if one is pro-Europe, one must support the Maastricht road to the single currency. That is bit like saying that, if one appreciates stand-up comedy, one must like Bernard Manning. The opposite is the case. Such confusion often arises on European issues, not least because they represent a wide range of issues. I should like to deal specifically with the economic element of the debate.
Last week the Secretary of State said in his statement that the IGC will not consider economic matters.The White Paper has confirmed, however, that nothing is off the agenda. Recently, the President of the Commission, Jacques Santer, said that he would put forward a specific proposal at the meeting in Turin next week on how to use the savings from the common agricultural policy to support investment in Europe.
With respect to those right hon. and hon. Members who have already spoken, the one issue above all about which most people are concerned is that which affects them most directly--the crucial economic issue of unemployment and job insecurity. That is the issue on which people want Europe to deliver. That is the issue on which people will judge whether the European Union is doing useful things or doing unhelpful things.
In Europe, 18 million people are officially unemployed and many more are seeking paid employment but cannot secure it; more than half of those people are long-term unemployed--that is, they have been unemployed for more than 12 months; and 5 million people under the age of 25 are unemployed. All hon. Members would agree that unemployment is the most serious issue for the European Union and for its member states to address. Talk about some of the niceties of constitutional arrangements pales into insignificance when compared with the issue of what we in Europe are going to do about unemployment.
We cannot talk about political arrangements at the IGC without some kind of economic context. Unless we know clearly how economic policy in Europe will develop, we cannot sensibly determine the appropriate political institutions to deal with it. For example, the question whether there will be a single currency influences the kinds of political arrangements that we might wish to put in place. It is my view that the Maastricht road to a single currency is so deflationary and will increase unemployment so significantly in Europe that it will put the very existence of the European Union at risk, as other hon. Members have said.
There is a political cost involved with economic policy, as well as potential benefits. Therefore, for the IGC to say that it is simply going to talk about so-called political matters--and to leave the difficult economics of the single currency and of deflation or reflation off the agenda--is not very sensible. Unemployment is the European problem. I reject the view of those who suggest that there is little that national Governments can do to tackle unemployment--because there is a lot that national governments can do--but it is clear that there are European initiatives to create jobs that have significant advantages.
The case for co-ordinated reflation in Europe, given the high degree of economic integration, is overwhelming. That would be the most effective way of reducing unemployment. However, the tragedy is that, at the moment, the economic agenda on Europe is not co-ordinated reflation but is co-ordinated deflation. That is explicit in the Maastricht approach to a single currency. My complaint in this context is not that the fiscal constraints are arbitrary and they have no economic basis whatsoever--although both those statements are true--but that that package is, beyond a shadow of doubt, severely deflationary.
"the idea that Europe is heading for a recession that would jeopardise the European monetary union."
"the automatic withdrawal of Commission proposals if not adopted within a certain deadline."
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