HC Deb 19 October 1989 vol 158 cc257-8
7. Mr. Lambie

To ask the Chancellor of the Exchequer what is the current short-term interest rate in (a) the United Kingdom and (b) Germany.

Mr. Ryder

On 18 October three-month money market rates were 15 per cent. in the United Kingdom, compared with 8.3 per cent. in Germany.

Mr. Lambie

Given the fact that the Chancellor said that he had to increase interest rates because the Germans had, what advantages does he see in remaining outside the EMS?

Mr. Ryder

My right hon. Friend the Chancellor has made it perfectly clear on several occasions—just as my right hon. and learned Friend the Lord President did in questions here on Tuesday—that we shall enter the exchange rate mechanism when the conditions that my right hon. Friend the Prime Minister set out at the Madrid summit have been met.

Sir Peter Tapsell

In view of the impact that changes in short-term interest rates can have on stock markets, do the Government have any plans to emulate the example of the United States and Japan by introducing circuit breakers in our domestic equity market, bearing in mind that if the American circuit breakers came into operation during one of their morning sessions, our market could be very vulnerable?

Mr. Ryder

That is a matter for the stock exchange and I know that it is being kept under review.

Mr. Robert Sheldon

Has the Economic Secretary read the comments of Mr. Henning Christophersen, who has responsibility within the cc for economic matters, that reliance on interest rates can be counter-productive in so far as it leads to wage rate rises? Does he agree that if he looks back over the past 13 months of the efforts of this Chancellor, the reliance solely on interest rates has been a grievous error?

Mr. Ryder

Of all people, the right hon. Gentleman should know that virtually every country in Europe is depending on interest rates to bring down their rate of inflation.

Mr. Hayes

Without in any way asking my hon. Friend to comment on the paper issued today by the Centre for Policy Studies on joining the ERM, as it has particularly said—and it is not exactly a nest of Left-wing vipers—that joining ERM would be the best anti-inflation policy that this country could have at present, will he ensure that that paper is widely disseminated among his colleagues?

Mr. Ryder

I should be very grateful if my hon. Friend could send me a copy.

Mr. Nicholas Brown

Given the Chancellor's earlier answer on EMS, how can Sir Alan Walters claim that the Prime Minister agrees with him and with a wholly different point of view to the view the Chancellor has just stated on behalf of the Government?

Mr. Ryder

The hon. Gentleman obviously has not been listening to the replies that have been given. On several occasions today, and during questions on Tuesday to the Lord President, it was apparent that the Opposition were not listening to the answers. The answer is that the Prime Minister has set out on numerous occasions that Britain will enter the ERM when the conditions set out at Madrid have been met.