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Mr. Tam Dalyell (Linlithgow): May I support my hon. Friend the Member for North Durham (Mr. Radice) in wanting to go in in the present circumstances, now, as soon as possible? Will the Prime Minister tell us in which year his elusive concept of the proper convergence is likely to occur?
I believe that my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and I are the only two remaining Labour Members who voted in favour of our European Community entry in October 1971. Along with him, may I ask what is the proposal for shadowing the
euro in the run-up period? My right hon. Friend has asked the Treasury four times about shadowing the euro; can the Prime Minister clarify the position?
The Prime Minister:
In relation to shadowing the euro, as we have made clear, we will run our own exchange rate policy until such time as we decide that we want to change that in accordance with the criteria that we have set down. I am asked to name a year when there may be convergence. I do not think that we can name the year, but it is possible for there to be convergence between different economies. There is a large degree of convergence between France and Germany in terms of economic policy, growth and so on, so it is important that we make a judgment in the round on that. There is no economic convergence between Britain, and France and Germany at present. Therefore, if we join when the economics are wrong, we shall pay a heavy price.
People go back over the exchange rate mechanism experience. Perhaps the right lesson to learn from that is that, whatever the politics of the situation, the economics have to be right. I think that most people felt that that was the problem on the membership of the ERM; its timing was judged politically. Unless the economics are right, there is a problem.
Mr. John Butterfill (Bournemouth, West):
I am sure that all hon. Members accept that the euro's success is vital to this country's economy and will wish the euro well, but that makes the issue of the corporate governance of the central bank even more important. The Prime Minister has said that there will be an important principle of rotation of board members, but will he confirm that Mr. Noyer, a Frenchman, will be the vice-president for the first four years, to be followed by Mr. Trichet, another Frenchman, who will be the president for eight years? When the Prime Minister embarked on his marathon lunch with Mr. Kohl and Mr. Chirac, where lunch went on to tea, then to dinner and then to supper, did he realise that they were going to have him for breakfast?
The Prime Minister:
I cannot say that there was much lunch as far as I was concerned. Obviously, it is sensible to try to rotate members of the board. Some of the more critical comments that were made by some of the smaller countries were unsurprising because they did not have places on the European central bank board, but the question surely is whether we have the right people for the board. I think that we do because all of them are highly credible, able people. They have credibility in international banking circles. Both Mr. Duisenberg and Mr. Trichet are central bankers of huge repute. I repeat: it would have been far worse if we had blocked Mr. Duisenberg, thrown his appointment out, not had Mr. Trichet and tried to go for someone else. That would have been the wrong thing to do.
Mr. Stuart Bell (Middlesbrough):
Will the Prime Minister note, in response to the question that was put to him by the hon. Member for Rochford and Southend, East (Sir T. Taylor), that unemployment in France fell below 3 million at the weekend and that forecasts coming out this week in Germany will show that unemployment is falling further there? Will he also note, in response to the
Does the Prime Minister agree with my hon. Friends the Members for North Durham (Mr. Radice) and for Linlithgow (Mr. Dalyell) that this is a question of political commitment and political will, and that 11 nation states coming together at the weekend to indicate their determination to create a single currency on the back of a single market indicates the political will? The Prime Minister has indicated his own political will, when economic convergence arrives, when there is a referendum and when there is a yes vote. Does he agree that those who believe in the single currency and in the European Union should now begin their campaigns?
The Prime Minister:
I am sure that my hon. Friend is right in saying that the single currency and the single market will be launched, and that the political will and commitment exist. He is also right in pointing out that the markets have reacted, contrary to the predictions that were made, with great tranquillity. I also think that it is important, when we talk about unemployment in other countries, even in respect of France and Germany, where there are high unemployment rates--although it is important to consider the fact that there are significant differences between east Germany and west Germany--not to be complacent about our economic position. If we compare the productivity levels of the British economy with those of France and Germany, we realise that this country has to do a lot of work. There is a danger that, because we are at a different stage of the economic cycle, we shall become complacent about our problems. If we consider French or German gross domestic product, we see that we still have a bit of a way to go.
Mr. Ian Taylor (Esher and Walton):
The Prime Minister may not have had his best ever weekend during the past few days, but he may have found it ironic, as some of us did, that by behaving as he did President Chirac was doing what the British media think the British Prime Minister should do during summit meetings. Now that there will be 12 years of leadership in the European central bank under two expert governors, there remain two questions. First, how does the Prime Minister intend to manage the British economy so that we can enter economic and monetary union on the right terms and at an early date? Secondly, how will he influence the other 11 members of the single currency as they take decisions while we are not in it? Regardless of the fudge at the weekend on the Euro X committee, we shall not be party to some of the key decisions that will affect 80 per cent. of our home market in the European Union.
The Prime Minister:
On the hon. Gentleman's last point, although we shall be present at the Euro X committee for any decisions that affect all 15 member states, it is right and inevitable that if we are not in the euro, we cannot participate in the decisions of the euro currencies. That fact must be faced.
As for managing the British economy for entry, it is important that we do so in a way that is right for our economy. The advent of monetary union has been a reason for some countries to take action on their budget deficit, public finances and monetary policy. It is worth
pointing out that some of those countries have made extraordinary progress in trying to meet the monetary union criteria. In Britain's case, it is important that we take these steps in any event. We are dealing with the budget deficit, taking action to squeeze inflation out of the system, and to have a stable and prudent monetary and fiscal policy. I think that our system of management should not change.
The hon. Gentleman referred to the position taken by the French. We could have tied the matter up at 2 o'clock on Saturday afternoon had we agreed to a split term, but we could not agree to that because it was in breach of the treaty. In the end, it was agreed that Mr. Duisenberg would be nominated for eight years. As I keep trying patiently to point out to hon. Members, Mr. Duisenberg had already said that he wanted to go early, and he could not be obligated to go on any particular date. He is free to stay for the eight years, but he has indicated his intention to leave earlier. That point was worth securing, and it was worth waiting for what in European negotiating terms is hardly a very long time.
Mr. Dennis Skinner (Bolsover):
Will the Prime Minister give a guarantee that, despite the clamour from Labour Members, from the Liberal Democrats and from a few Tories for Britain to join the euro before the next election, which would be not a compromise but a failure of integrity by the Prime Minister and the Labour party generally, the matter will be resolved after the next election and after a referendum? If he is a betting man, would he like to put some money on whether this fellow Duisenberg, who will have four years, will last longer than the Leader of the Opposition?
The Prime Minister:
The Tory party may be looking for a split term. We have set out our position clearly. We do not believe that there will be convergence during this Parliament. There will be a referendum; it will ultimately be the decision of the British people, and that is right. The position of the official Opposition nowadays--if there is such a notion--is that the pound should be lower, which is an odd position for the Conservative party to argue.
Sir Michael Spicer (West Worcestershire):
Whatever the Prime Minister may say, is not the truth about the Duisenberg deal that this is the first time that Ministers have arrogated to themselves powers that are precisely defined in the treaty as resting elsewhere? Does not that bust apart the acquis communautaire?
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