HC Deb 21 October 1987 vol 120 cc706-7
2. Mr. Knox

asked the Secretary of State for Foreign and Commonwealth Affairs what further proposals he intends to place before his European Community partners for the development of Community policies.

The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker)

My right hon. and learned Friend and I will continue to press our ideas for legally binding controls on Community expenditure, including stabilising mechanisms for agricultural commodities.

Mr. Knox

Will my right hon. Friend impress on all her colleagues in the Government that one of the main stumbling blocks to the development of the Community as an economic force is Britain's failure to join the exchange rate mechanism of the EMS?

Mrs. Chalker

I think my hon. Friend already knows that I shall use my best endeavours to convince my colleagues of what we believe to be right and in the best interests of the United Kingdom. A decision on whether to join the exchange rate mechanism is under regular review by the Government, and my hon. Friend will recall that the Chancellor of the Exchequer has said many times that he will take the decision to join that mechanism when the time is right.

Mr. Spearing

The Minister mentioned budgetary discipline. Will she confirm that the European Council meeting in Copenhagen will be a treaty meeting and, therefore, de jure, and that decisions taken by the Heads of Governments on that and other topics on documents presented by the Commission will commit this country? Irrespective of that, will she agree that the matters that will he brought up at Copenhagen should be thoroughly debated in the House well before 4 December?

Mrs. Chalker

The Copenhagen meeting of leaders of European Community countries will be no different from any other European Council meeting. We shall proceed exactly as we have previously under the Single European Act, which now binds us all together.

Mr. Dykes

Will my right hon. Friend confirm that the United Kingdom is fully committed to the development of the Community, which certainly needs such a commitment by all members states after a number of lean years, not least because the Federal Republic of Germany will have the next presidency, when it will be presenting new ideas for the development of institutions and the further use of qualified majority voting?

Mrs. Chalker

My hon Friend knows well that Britain is fully committed to the development of the Community, but before we can develop the Community we must have secured full, legally-binding control of expenditure. That is why we have always put and will certainly put at the head of the discussions in Copenhagen the need to establish stabilisers for all foods and the need to establish budgetary discipline on non-obligatory as well as on obligatory future spending. We are working for those things, and when they are in place we can go on to discuss the further development that we all surely want to see.

Mr. Benn

Is the Minister aware that the very wild fluctuations that occurred in world markets reveal a great lack of confidence in the Western economies? Is she also aware that the damage that could be done to the British economy as a by-product of, for example, American policy makes it absolutely essential that we should not join the EMS and dismantle one of our remaining defences which it may be necessary for us to use to protect our own economy from the gambling that is taking place in the world's stock markets?

Mrs. Chalker

I find it completely impossible to follow the right hon Gentleman's logic. He should remember that there is no doubt about the underlying strength of the United Kingdom economy. This year we have annual growth of 4 per cent. and we are in our seventh successive year of steady growth. Industrial production is at its highest ever level. Markets have greatly over-reacted and we must wait for them to settle. Thankfully, they have certainly seemed steadier over the last few hours. Even at its lowest point yesterday the stock market was above its January 1987 level. Scaremongering and rumour-mongering do a great deal more harm to Britain than does looking at the realities of the market.