| Previous Section | Index | Home Page |
Mr. Love: Will the hon. Gentleman give way?
Mr. Wilkinson: I will not give way.
Flexibility is not obtainable under the EU's current model, which is sclerotic and over-taxed. Although Mr. Prodi may now say that the stability pact is nonsense or
stupid, or words to that effect, the fact is that it is at the heart of EMU, as laid out in the Maastricht treaty. The fiscal obligations that are now placed on member states are far too onerous in a time of quasi-deflation. We warned about those factors in debates on Maastricht and, time and again, we were told that we were stupid and that price stability was more important than employment. I disagree, and I suspect that the hundreds of thousands of unemployed people on the continent disagree today.The fact is that is it is thoroughly dishonest of the Chancellor to embark on a campaign to soften up the British electorate, with taxpayers' money, in advance of a referendum on whether the British people wish to join the euro. We ought to have the referendum first. Then, and only then, if there is a majority in favour of our participating in a single currently, should we go ahead with the softening-up and, of course, the decision-making process in government and the approval of Parliament.
People say that these issues are confusing and complicated. They are not—any more than the Maastricht treaty was complicated. I urge my hon. Friends to remember Matthew chapter 22, verse 21. When the Pharisees sought to trick Our Lord by challenging him on whether he ought to pay tribute to Caesar or to God, Our Lord asked for a denarius to be brought forth—a penny, which was the single currency of the Roman empire at that time. It was the unit in which tribute was paid, inasmuch as we will have to pay tribute to the EU if we are part of EMU. Our Lord asked whose superscription was on the penny. That says it all. The superscription was that of Caesar, and on the euro notes it is that of the euro. On our currency, it is that of our Queen, it is she whom we serve in Parliament and it is to her that our people owe allegiance. That is something that I am not prepared to give away.
4.58 pm
Mr. Chris Bryant (Rhondda): On that rather religious note, and on the day Her Majesty has signified her assent to the Clergy Discipline Measure 2003—it sounds rather more interesting than today's debate, but that one passed me by—I would say to the hon. Member for Ruislip-Northwood (Mr. Wilkinson) that the biblical allusion that perhaps more readily springs to my mind is that of the moneychangers in the temple. Perhaps Our Lord had more direct intentions of getting rid of moneychangers, and a single European currency might have appealed.
The debate has been an interesting. I am struck, however, by the fact that every hon. Member who has spoken in the debate has been a man. Indeed, every person who has sought to speak in the debate has been a man. There have been only three women in the Chamber at any point during the debate: one was a Parliamentary Private Secretary, one was a Whip, and the other was Madam Deputy Speaker. I sometimes worry about the nature of the debate in the country, because many people are clearly put off. Every opinion poll says that people, particularly women, feel that they do not have enough information on the subject. They want to understand the subject, but until now we have perhaps used language that has not been very appropriate.
It is good to be involved in a debate with three of the great beasts of the Conservative party. We have had quite a display of great bestiality from the right hon. Members for Wokingham (Mr. Redwood) and for Kensington and Chelsea (Mr. Portillo) and from the right hon. and learned Member for Folkestone and Hythe (Mr. Howard).
I want particularly to nail one piece of Tory mendacity today, however, which is that the draft constitutional treaty makes no provision for member states to remain outside the euro. Article 1.14(2) makes specific provisions for those who have adopted the euro, and therefore, by definition, for those who have not adopted the euro. We can therefore see an end to that point.
Mr. Bacon: Is the hon. Gentleman saying that the provisions of protocol 11 of the Maastricht treaty are explicitly reflected in the draft constitution?
Mr. Bryant: Indeed, I think that they are admirably met in the draft constitution.
To move on to the debate in the country about the euro, a sharp divergence seems to exist between those who are ideological on the matter on both sides—those who want to join the euro at any price, and those who refuse to countenance the euro at any price, whatever the burden of proof may be—and those who want to adopt a more rational approach. I think that the Chancellor got it spot-on earlier, when he drew the distinction between this Government, who have sought to prove or to make sure that the economics are right before recommending membership of the euro for the UK, and the Conservative Government, whose Chancellor was torn between two different sets of ideologues—those who ideologically wanted us to join the exchange rate mechanism for wholly political and not economic reasons, and those who were wholly opposed. In the ebb and flow between those two ideologies, the then Chancellor ended up taking us into the ERM at wholly the wrong time, and gave us all the economic problems throughout the early 1990s that we know about.
I believe that we should adopt a wholly rational approach to this matter. We should look at the economics, and we should of course look at the politics. It is not solely an economic issue. Several right hon. and hon. Members, including my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore), have made the point that it is not purely an economic argument, but if we were to go into the euro solely on the basis of politics, when we were not able to prove that the economics were right, we would have wholly undermined our case. I believe that a combination of the two is required.
The potential benefits of joining the euro for the United Kingdom, however, are clearly laid out in the Treasury's documentation, most notably in terms of increased trade. We need only look at page 59 of one of the documents, "EMU and trade", to see that there are many different estimations of what the potential increase in trade to the United Kingdom might be were we to join EMU, as it says half way down page 59:
- "any increase in trade arising from the complete elimination of exchange rate volatility within a given area is not likely to exceed 10 per cent at most . . . a large body of empirical work shows that the impact on trade of membership of a currency union could be much more substantial."
Even if we take the lowest estimate of all the economists who have done substantial work on this issue, the growth in the economy over the next 20 years would be something in the region of 4.5 per cent. That comes out at £50 billion growth in GDP—£16 per head growth in GDP for everybody in the country—and were we to estimate that, say, 40 per cent. of GDP would go to public services, that would mean an additional £20 billion spent on public services in this country. That is a significant benefit, and it is on the basis of the Treasury's lowest estimate of the likely benefit to UK trade.
Of course, there will be significant benefits in terms of transaction costs. Many businesses are already experiencing the problems of all their competitors in Holland, France, Germany, Spain, Portugal and Greece not having to face the problem of transaction costs, and of their business in the United Kingdom being less competitive than those on the continent as a result. This issue is likely to grow over time. Some still believe that Britain is a pre "in" country and they are therefore maintaining their links with British businesses and still buying from them. However, the moment Britain were to say, "We will not join for the next 10, 15, 20 years or ever," those people would start to think that they could not accept the additional transaction costs and that they should take their business elsewhere.
I also believe that there would also be significant benefits for prices. From work that has been done by the venture capital company 3i, we already know that two thirds of all companies that operate across several eurozone countries now use the same price in all those countries. Whenever one goes to shops on the high street in the UK and also on the high streets of Paris, Rome or Madrid, one often sees a single pricing ticket that has been put there by the manufacturer and that shows the euro price and the British price. The exchange rate between the two is the worst in the world.
The people of the eurozone are now getting considerably cheaper products, and prices are going down to the lowest price across the eurozone. We know that the two most expensive cities in Europe are London and Copenhagen. What do they have in common? They are both outside the euro. The transparency of pricing that would come from our joining the euro would have a significant effect not only on the cost of items such as cars, but on all prices and the cost of living.One sad fact that was established last year is that the cost of the gifts that are likely to be given to children is 19 per cent. higher in the UK than in the eurozone. By joining the euro, we would see a significant improvement in the standard of living, because prices would come down.
There is also a significant danger in delay. Although I accept the Government's rigorous assessment of the five economic tests and of the economics of whether we should join at this point, our economy will suffer if we delay for too long. It is not as though the economy will be like a lemming and fall off a cliff, but there will be a gradual and slow deterioration in our economic strength, viability and competitiveness.
We have already seen that we face problems with the inward investment into this country. Ernst and Young, which is by no means an ardent pro-European company, conducted a survey earlier this year which shows that Britain's share of the inward investment into European countries from 1998 to 2001 fell quite dramatically. In 1998, we took 28 per cent. of inward investment into Europe; in 2000, we took 26 per cent.; and, in 2001, we took only 19 per cent. My worry is that that figure will get worse.
For those hon. Members who think that inward investment is not all that significant, it is worth bearing in mind that 2 million Britons are employed by foreign investors, that 40 per cent. of the UK's gross exports are produced by foreign companies that invest in this country and that, since the euro was founded, 115,000 jobs in the UK have been lost in a variety of industries. In each of those cases, our failure to be in the euro and the long-term prospect of our never joining has been cited as the major problem.
Delay would be a problem for economic reasons, but it would also be a problem for a political reason. The European Union faces dramatic change in every aspect of its workings, from the operation of the Council of Ministers to that of the European Central Bank. The argument of my right hon. Friend the Chancellor on the Lisbon agenda is vital, but it will be difficult for us to win arguments about how the growth and stability pact and the ECB should operate, and about transparency within the ECB, unless we declare our hand and say that we intend to join the euro. As the Treasury Committee pointed out, if we do not move towards euro membership in the near future, we will lose a vital opportunity to affect the European economy that is being built on our doorstep and on which we will be wholly dependent in the coming years.
It would be folly, as ever, for Britain to end up playing catch-up yet again. We have done that so often. We were not part of the common agricultural policy at the start, so we were not able to influence the debate on that and we have spent the past 20 years battling for minor reforms. Although we have won several battles in the past few weeks, there are battles yet to win. If we had been involved from the beginning, we would have ensured either that the CAP did not exist or, if it did exist, that it was in the interest not only of farmers, but of the whole of Europe.
It is likely that Poland, Hungary and the Czech Republic will want to join the euro in the next couple of years. If that happens, we will be playing catch-up with them. The British Prime Minister will have to visit the Polish and Hungarian Prime Ministers to argue about our possible entry rate. That shows a complete failure of political leadership.
There are many nay-sayers—we have heard from them today—who say that there is no reason why we should join the euro and that we would lose out. Some argue that we should not go down the road of joining because there has been dramatic inflation in countries that have joined the euro and prices have been marked up. I spoke to a gentleman in the marketplace in Treorchy two weeks ago who said that it is much more expensive to buy a pint of beer in Spain this year than it was last year, and that that was all because of the euro. I pointed out that the beer was exactly the same price for a Spanish person—it was Euro3 last year and it is Euro3 this
year—but that it cost him more this year because it costs £2.50 to buy Euro3 this year while it cost only £2.20 last year. The exchange volatility affected the price of his beer, and that is the same problem as British industry faces as it tries to do its business throughout Europe. He said, "That's a very good point; I think you've persuaded me."I am keen to allow other hon. Members to speak, so I shall not address the one-interest-rate-fits-all problem raised by the right hon. Member for Kensington and Chelsea in great detail. I do not accept his argument that just because the United Kingdom has a problem determining an interest rate that suits the whole of the country, we would have a greater problem determining a euro interest rate that suited the whole of Europe. Most of the economic assessments that have been done show that there is greater convergence of interest rate needs between the United Kingdom and eurozone countries than among many of the eurozone countries, and, indeed, among different parts of the United Kingdom.
I want to put a final nay-sayer opinion to rest; it is prevalent in several of the trade unions that are opposed to membership of the euro. They believe that joining the euro would mean that we could not invest in public services. That is sheer nonsense. France invests 46 per cent. of its gross domestic product in its public services but the United Kingdom invests only 36.8 per cent. of its GDP in public services. We would be able to afford all the significant—and right—extra investment that we want for our public services if we joined the euro. My worry is that if we do not join, our economy will dwindle and die in the long term, which would mean that we would not be able to invest in our public services because we would not be able to afford it.
| Next Section
| Index | Home Page |