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Mr. Hague: Answer the question.
The Prime Minister: If the right hon. Gentleman had been in charge of our negotiating position, he would have blocked the only candidate who was credible for the job, he would have ended up having to try to find a third candidate early on Monday morning, and he would have opposed the launch of the euro altogether, yet he accuses us of causing mayhem in the markets.
I entirely understand why the right hon. Gentleman may want to make debating points, but in the end the result was the right one for Britain and for Europe. If we had
ended up with stalemate instead of a decision, it would have been a disaster. Once all the debating points are out of the way, I ask him to reflect whether he would have maintained as his negotiating position the position that he has outlined to the House. If he had done so, it would have been a disaster. Fortunately, that disaster was averted.
Mr. Paddy Ashdown (Yeovil):
I agree with the Prime Minister that the result was the right one for Europe. One should use the word "historic" sparingly in the House, but this genuinely was an historic event. The first sadness is that Britain, instead of being a part of it, was at best an umpire, but, as the Prime Minister well knows, actually a spectator at the sidelines. Is it not the case that, yet again, we shall in due course join an institution to which we did not belong when it was formed and which we have not effectively shaped?
Is not the second sadness the sad position to which the official Opposition--an increasingly inappropriate term--have sunk? They have locked themselves into a corner, and locked themselves out of mainstream domestic politics and European politics as well. Is it not a sad reflection on the party of Europe, as the Conservatives once called themselves, that, instead of commenting on the big event, they comment on the small compromise? It is a little like treating the news of the victory over the armada with a complaint that Drake did not play a very good game of bowls. It is a preposterous position.
Of course the compromise was messy. Some may even say that that is a specious description of it. However, that will not make the slightest difference to such an historic event. Two questions must be asked about the compromise. First, will the euro have effective government and leadership? The answer is yes, not for 10 years, but for 12. Secondly, do the markets express their confidence in that? The answer is resoundingly yes.
I shall make two further points to the Prime Minister. First, unhappily for his Government, who are more pro-European and could have much more influence in Europe, he is losing that by standing at the side and making the same mistake as the previous Government made, being led on Europe rather than leading on Europe. Secondly, for as long as he does that, Britain will lose trade, investment and influence. Is not the risk for Britain the fact that this weekend there was formed a soft but stable Europe, while we must continue with a high, volatile and unstable pound?
The Prime Minister:
On the right hon. Gentleman's latter point, the decision must be taken in our national economic interest. Some people say that we should join the euro no matter what and others say that we should not join as a matter of principle. Both those positions are entirely understandable. The Government's position is that the matter should be decided according to our national economic interest. For reasons that we have set out many times, we do not believe that there is proper convergence between Britain and the economies of France and Germany, in particular, at present.
I do not believe that our position in that respect is the same as that of the previous Government. They could never decide whether there was an insuperable constitutional barrier to the single currency. We have decided that issue. They did not make preparations to
ensure that Britain was in a position to join the single currency should it wish to do so. We can make that statement and are making those preparations. In the end, even though monetary union cannot be conceived of except politically, it cannot be made to work except economically. The Government believe that the economics must be right.
In respect of the right hon. Gentleman's comments about the euro, I think that it will be a strong currency. Those who claim that it will be weak and that the events of the weekend have damaged it are the same people who said that the euro would never happen, that 11 countries would never join and that it would be postponed. [Hon. Members: "Who?"] Conservative Members were among the leading proponents of that position--I thank them for reminding me of that.
The fact is that monetary union will happen. As to the compromise, I said in my statement that the media and others have missed a simple fact. Let me repeat it. It is claimed that Mr. Duisenberg wished to stay in his post for the full eight years. He has always made it clear that he did not want to do that, but he was insistent, as were others--including ourselves--that he could not be obligated to stand down. He has always said that he wanted to stand down once the euro was launched, and the question was whether he should be given a specific date for standing down. It is true that the matter was discussed for 10 hours, but it was worth it in order to secure that basic principle. In the end, the decision was basically in his favour.
As for the right hon. Gentleman's remarks about the Opposition, we all agree about that.
Mr. Robert Sheldon (Ashton-under-Lyne):
Does my right hon. Friend agree that, before entering the euro, it will be necessary to have a long period of stability, which means effectively shadowing the euro? As the Monetary Policy Committee has been instructed to look at price stability above all other matters, will my right hon. Friend consider giving it fresh instructions so that we may prepare for our entry into the EU monetary system?
The Prime Minister:
Price stability is enormously important. That is one of the reasons why there must be a strong euro--I believe that it will be strong, and the early indications are that the market thinks so, too. From our position, it is important that we continue to make preparations. Britain should be in a position to join if we decide to do so.
It is important to emphasise that, in or out, the euro will affect Britain. The idea that we should carry on as we were before 1 May, making no preparations at all, is disastrous. Fortunately, the City of London is now probably better prepared for the euro than any other financial centre in Europe. That is extremely good news. I believe that our preparations are the right ones.
Mr. Peter Brooke (Cities of London and Westminster):
Does the Prime Minister really believe that no harm has been done by the course of events in Brussels this weekend?
The Prime Minister:
Yes, I do as a matter of fact. I shall explain why. Real harm would have been done if
Mr. Michael Howard (Folkestone and Hythe):
He did not.
The Prime Minister:
The Opposition have changed their mind already. [Interruption.] My hon. Friends are being very unfair: that policy lasted for all of 10 minutes. If we had ended up blocking Mr. Duisenberg's candidature, we would have ended up without him and without Mr. Trichet, and we would have had to search for a third candidate in the early hours of Sunday morning, which would have been disastrous.
The right hon. Member for Cities of London and Westminster (Mr. Brooke) knows from his experience in government that European negotiations are often difficult, but it is important that the result is right. This is the right result. We shall have for 12 years highly respected presidents of the central bank who will be tough disciplinarians, which is what the euro needs. Whatever the difficulties, the decision was right, so I do not believe that there was damage.
Mr. Tony Benn (Chesterfield):
Given that economic and monetary union has always been considered by its architects to be a political policy, is not it absurd to suppose that, with 15 million unemployed in the European Union, the bank will not be subjected to continuing political pressure throughout the life of the euro? Were a group of appointed and unaccountable bankers to hold the levers of economic power in the EU, would not that remove the rights of the electors, of the Parliaments and of the Governments of the countries within the Union and effectively destroy democracy itself?
The Prime Minister:
My right hon. Friend criticises the political pressure that has been exerted on the central bank, but that is, as I understand it, the proposition for which he argues. Price stability and the independence of the bank are important, which is why it is better that the Bank of England is independent to set interest rates. In the longer term, that will produce greater stability and ensure that this country does not go back to the days of boom and bust and huge fluctuations of growth followed by recession, which we had under the Conservatives. If we consider the central banks not only of Europe but of the world, independent central banks are better.
Mr. Douglas Hogg (Sleaford and North Hykeham):
Will the right hon. Gentleman confirm that article 109a of the treaty provides that the term of appointment for the president "shall be eight years"? In view of what Mr. Duisenberg has said, is there not a clear breach of the treaty? Has the right hon. Gentleman lent his name to a fudge? How does he justify that, as he has frequently said that the criteria would not be fudged? Why have we signed up to a French president now? Is that contrary to the replacement procedure contemplated by article 11 of the protocol? Is the truth that neither the right hon. Gentleman nor his friends and colleagues at the summit will pay much heed to the language of the treaty?
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