European Monetary Union (Hansard, 14 June 1989)

§ 5. Mr. Kirkwood
To ask the Secretary of State for Foreign and Commonwealth Affairs when he last discussed the question of European monetary union with M. Jacques Delors.

§ Sir Geoffrey Howe
European monetary co-operation was discussed at the Foreign Affairs Council in 895 Luxembourg on 12–13 June, which M. Delors attended, in the context of preparations for the European Council at Madrid on 26–27 June.

§ Mr. Kirkwood
Will the Foreign Secretary take it from me that we missed his presence at the Hawick common riding on Friday? I hope that he enjoyed his visit to the Borders, where I can tell him that the Delors report and the details thereof were on everyone's lips. The Government's endless procrastination is not good enough as it is prejudicing London as a financial centre in the longer term. More immediately and urgently, it is prejudicing the interests of millions of young home buyers who are making high mortgage repayments because of high interest rates. Does the Foreign Secretary accept that if there is continuing uncertainty about the currency, whatever the exchange rate, interest rates will always rise and that the only way to end that uncertainty is to join the exchange rate mechanism of the European monetary system?

§ Sir Geoffrey Howe
I am grateful for the hon. Gentleman's welcome for my visitation to his constituency, where I was delighted to find a growing fund of wisdom determined to return to the European Parliament the excellent Conservative representative. [HON. MEMBERS: "Name him!"] His name is Alasdair Hutton. If I am allowed to do so, I should like to advertise it even more plainly. All prudent voters in the hon. Gentleman's constituency should take the opportunity to vote tomorrow for Alasdair Hutton. I should also add, in answer to the hon. Gentleman's question, that our reaction to the Delors report on economic and monetary union makes a sharp distinction between what is there spelt out for stages 2 and 3 of the process towards economic and monetary union, which involves very far-reaching changes indeed which cannot be contemplated in the foreseeable future. In relation to the first stage, we have already taken many practical steps in that direction. We will need to see how much further we can go. There is a distinction to be drawn, and we strongly support what can be done under stage 1.

§ Mrs. Currie
Are not the economies of the member states still too different? They have different growth rates, employment patterns, unemployment rates, economic histories and patterns of economic development. Does my right hon. and learned Friend agree that entry into something as rigid and controlled as European monetary union should be a consequence of future closer co-operation between the economies which will come after 1992—and, I hope, before—and not a precursor of it?

§ Sir Geoffrey Howe
My hon. Friend is right in focusing on one aspect of the many features that are necessary before stages 2 and 3 of EMU can be contemplated. She has drawn attention to the economic factors. Powerful changes in institutional and constitutional arrangements will also have to be made, including transfers of sovereignty to Europe-wide institutions in relation to economic and monetary policy. I am sure that those changes go well beyond those contemplated by the overwhelming majority of hon. Members.

§ Mr. Spearing
When the Foreign Secretary next meets Mr. Delors and talks about economic and monetary union, will he assure him that the signature of the Governor of the Bank of England on the Delors report 896 was to show assent to the feasibility of the changes, not their merits or desirability? Will the right hon. and learned Gentleman comment on the particular method used by the Community which may cause misunderstandings about what the signature represents?

§ Sir Geoffrey Howe
The hon. Gentleman, with his customary insight, has easily overcome any risk of misunderstanding. It has been well known throughout that the Governor participated in that report in a personal capacity, and the report represents the conclusions of a group of experts and others constituted in that way. It is important to recognise that, even in respect of feasibility, the report emphasised the immense sequence of changes that would have to be made over a long period and expressly excluded any commitment to a timetable of any kind—so to that extent as well, it was wise. The least percipient section of the report was paragraph 39, which argued that by taking the first step one was committed to the last. Nothing should be further from the truth.