Government Deficits (Hansard, 12 November 1992)

§ 11. Mr. Soley
To ask the Chancellor of the Exchequer by what date he estimates the United Kingdom will have met the convergence criteria on Government deficits as laid out in article 104c of the treaty of Rome, proposed under the Maastricht treaty.

§ Mr. Dorrell
The Government have a long-standing commitment to avoid what the Maastricht treaty describes as "excessive budget deficits".

§ Mr. Soley
Given that the Government could already meet the criteria of article 104c, can the Minister tell us why they have deferred signing it? Is it for the political reason that if they sign it the European Commission could fine Britain? If so, does not that indicate that the Government have no serious intention towards the long-term convergence of the economies of Europe?

§ Mr. Dorrell
The hon. Gentleman has misunderstood completely the relevant provisions of the treaty. There is no provision there for the Commission to fine any member state for transgressing a single rule. The treaty provision requires the Commission to present a report to the Council in the event of a member state finding itself in a position 986 where the Commission believes that it is running an excessive budget deficit. It is nowhere near as automatic as the hon. Gentleman's question implies.

§ Mr. Paice
Is it not abundantly clear that many countries that signed that treaty do not expect to reach those convergence criteria? Whereas this country decided not to support the move to the single currency until we know what the situation is, many other countries such as Italy will have to renegotiate because they will not be able to fulfil their obligations.

§ Mr. Dorrell
My hon. Friend is right to point out that, from the beginning of the negotiations, our position has been that we cannot reasonably commit ourselves to joining a single currency years in advance, when we are unaware of the circumstances in which that currency will come into effect. My hon. Friend is also right to suggest that other member states, and the people within them, are coming to realise the wisdom of that position.

§ Mr. Cryer
Does not article 104c imply an enormous handing over of economic power to the EEC? Would not Mr. Martin Bangemann be among those Commissioners who would initiate proceedings if the Government acceded to the full section of the treaty, which could result in the Council of Ministers taking a decision to fine the United Kingdom if we failed to raise taxes or to cut public expenditure? Also, is it not true that the United Kingdom Government would not be allowed to vote in such proceedings if we were subject to them?

§ Mr. Dorrell
The hon. Gentleman is advertising the importance of my right hon. Friend the Prime Minister's achievements in allowing us to make a decision to join, or not to join, a single European currency when we are able to take into account all the circumstances in which that currency will come into effect. Those circumstances are not yet clear.