§ 12. Mr. Ashdown
asked the Chancellor of the Exchequer what studies his Department has done into he effects of joining the European monetary system.
§ Mr. Ian Stewart
The Treasury submitted a memorandum to the Select Committee on the Treasury and Civil Service in June 1985.
§ Mr. Ashdown
Is the Minister aware that this week the CBI has come out formally in favour of joining the EMS? The Government continue to say that they are in principle in favour of joining the system when the time is right. As the exchange rate has moved through almost every conceivable position on the scale during the past year, will the Minister set out the criteria that the Government use to judge when the time will be right?
§ Mr. Stewart
I am aware that Sir Terence Beckett said that he thought it would be a suitable time to join the EMS in relation to the current levels of the exchange rate. However, there are many other factors that have to be taken into account concerning the conduct of financial policy generally. We have always said that there are arguments both in favour and against joining the system and that we would not want to join unless we were convinced that the balance was clearly in favour of so doing.
§ Mr. Budgen
In view of the widespread and genuine misunderstanding about the Government's present monetary policy, will the Government give an undertaking that there will be a definitive statement on monetary policy in the Budget?
§ Mr. Stewart
I think that my hon. Friend will have to wait and see. My right hon. Friend the Chancellor of the Exchequer, who is sitting beside me, will no doubt have heard what he said.