European Economic and Monetary Union

HC Deb 22 March 1973 vol 853 cc640-2

11. Mr. Deakins

asked the Chancellor of the Exchequer if he will raise the issue of progress towards EEC economic and monetary union at the next meeting of EEC Finance Ministers.

12. Mr. Marten

asked the Chancellor of of the Exchequer if he will make a further statement about economic and monetary union and the parity of the £ sterling.

13. Mr. Cronin

asked the Chancellor of the Exchequer if he will make a further statement on his policy with regard to the parity of sterling in relation to other Common Market currencies.

26. Mr. Moate

asked the Chancellor of the Exchequer if the question of progress towards economic and monetary union is to be discussed at the next meeting of EEC Finance Ministers.

Mr. Barber

I shall be attending a meeting of EEC Finance Ministers in Brussels tomorrow morning, but that meeting will be concerned primarily with the reform of the international monetary system, prior to the meeting of the Committee of 20 which I shall be attending in Washington on Monday. I have nothing further to add to the many statements which I have made recently on the subject of economic and monetary union and the parity of sterling.

Mr. Deakins

Is not the objective of European economic and monetary union a mirage so long as the British Government are determined—and rightly so—to seek fixed but adjustable parities for the £ sterling.

Mr. Barber

No, that does not follow. A number of objectives were set out in the summit communique, and those are the objectives to which we are working.

Mr. Marten

If it is right to have a floating pound, independent of the Common Market at this time, what are the criteria by which it would be judged wrong to have the same floating pound?

Mr. Barber

I have already told the House that I explained to my colleagues in the EEC that in present circumstances it was not practical for the United Kingdom to join a common float on the basis of the sort of conditions which were embodied in the Community's scheme. I have said repeatedly that it is the intention of Her Majesty's Government to join as soon as conditions permit.

Mr. Cronin

Will the right hon. Gentleman consult his EEC colleagues and try to do something to bring about a much more stable situation? Does he agree that another international monetary crisis is bound to occur in the next 12 months, under the present arrangements? Will he bear in mind that unless the Government improve their management of the country's economy the pound will float down to a level where the cost of food and raw materials will become even more intolerable than at present?

Mr. Barber

The best way to improve the economic condition of this country and standard of life for the British people is for all sections of the community— which means both sides of the House—to join in fighting inflation.

I entirely agree that reform of the international monetary system is of paramount importance. That is one of the principal reasons for my leaving for Brussels this afternoon to attend a meeting tomorrow prior to the meeting of the Committee of 20. Like ourselves, Mr. Shultz, the Secretary of the United States Treasury, who was here earlier this week, recognises the urgency of this matter.

Mr. Moate

I congratulate my right hon. Friend on his determination to allow the pound to continue to float in present circumstances. Will he explain under what circumstances he would regard it as right for the pound to return to a fixed parity?

Mr. Barber

I do not think that that would be appropriate. That is a matter for the Government to judge.

Dr. Gilbert

May I further congratulate the right hon. Gentleman on setting conditions for a joint float which were intended to be impossible for the other Common Market countries to accept in the first place? Further, can the right hon. Gentleman give the latest best estimate of the change in the value of the £ sterling against the weighted average of all the other currencies since June last year?

Mr. Barber

I could not give that without notice.

18. Mr. Norman Lamont

asked the Chancellor of the Exchequer whether, as part of the developments in European monetary co-operation, he will seek agreement among the Finance Ministers of the European Community to allow international settlements between Community central banks to be made in gold at a price more approximating towards that obtainable in the free market.

Mr. Higgins

No, Sir.

Mr. Lamont

Without expressing a view on the ultimate role of gold and the international monetary system, may I ask my hon. Friend whether it is not the case that any addition to the SDR system will take time, and in that situation is it not unfortunate that the gap between the official price of gold and the price on the free market effectively sterilises part of the world's monetary and foreign exchange reserves? If the Americans will not adopt a realistic attitude to the subject is it not about time Europe did?

Mr. Higgins

The future role of gold is a matter for discussion in the Committee of 20. There are powerful objections to any change in its official price and we believe that there are better ways of tackling world monetary problems, on the lines that my right hon. Friend put forward at the meeting before last of the International Monetary Fund. Certainly, the role of gold is important and it has to be looked at in that context.