European Monetary System (Hansard, 15 May 1986)

§ 7. Mr. Knox
asked the Chancellor of the Exchequer when he next proposes to have discussions with the European Community Council of Ministers about the European monetary system.

§ Mr. Ian Stewart
Aspects of the European monetary system come up for discussion from time to time.

§ Mr. Knox
Can my hon. Friend think of more suitable circumstances than those that obtain at present for Britain to join the exchange rate mechanism of the EMS? If not, why do we not join?

§ Mr. Stewart
We have always made it clear that we see both advantages and disadvantages in membership of the exchange rate mechanism of the EMS. We keep it under review. We would need to be satisfied that there was a clear balance of advantage before joining.

Mr. Meadoweroft
What is the right basis on which we should join the EMS?

§ Mr. Stewart
The hon. Gentleman makes a fundamental mistake in assuming that membership of the ERM is determined solely on the basis of prevailing rates of exchange between sterling and other currencies. A range of other matters, such as volatility and the technical arrangements of the mechanism itself, must be taken into account.

§ Mr. Budgen
When my hon. Friend has an opportunity to speak to my right hon. Friend the Chancellor, will he tell him that it would be a good thing if he told his many friends among the fashionable economic commentators that the Prime Minister's opposition in principle to joining the EMS is neither eccentric nor isolated, and that many hon. Members on both sides of the House would deeply resent the loss of national sovereignty that would occur if we were to join?

§ Mr. Stewart
I note what my hon. Friend has said and, if I get an opportunity to see my right hon. Friend the Chancellor, I shall pass on his remarks. My hon. Friend's question and the question raised by my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) illustrate the fact that people can hold different opinions on this matter.

§ Mr. Evans
When the Minister next meets his European colleagues to discuss European matters, especially the ecu, will he inform them of the Chancellor's new-found enthusiasm for profit-sharing by employees as part of their wages? Will the hon. Gentleman inform his European colleagues that the Government are prepared to accept the modest Vredeling proposals on employees having the right to information about their companies?

§ Mr. Stewart
The hon. Gentleman's question is rather far from the question of the European monetary system. However, I am glad that he has some words of approval for my right hon. Friend's profit-sharing proposals.

§ Mr. Dorrell
If, as my hon. Friend said, there are advantages and disadvantages in joining the EMS, what is the critical disadvantage that keeps us out of it, and therefore keeps our currency fluctuating, in preference to a sound, stable currency at a fixed rate against the currencies of our major European partners?

§ Mr. Stewart
Two or three months ago I went into these questions at some length in a debate in the House, and I shall gladly do so again outside the Chamber with my hon. Friend. Clearly, in considering the EMS, we must recognise that joining would not be an easy option. My hon. Friend's point about the movement of the exchange rate between sterling and the continental currencies is only part of the picture. It is a mechanism, and a number of its aspects must be taken into account.