HC Deb 30 March 1995 vol 257 cc1175-6
10. Mr. Milburn

To ask the Chancellor of the Exchequer what is the extent of the Government's participation in the practical steps needed to create a single European currency. [15284]

Mr. Kenneth Clarke

As I have said before, we are playing a constructive part in the technical preparations, but that does not prejudge our decision on whether to participate, which is protected by the United Kingdom opt-out.

Mr. Milburn

But which Minister speaks for the United Kingdom Government in the discussions? Is it the right hon. and learned Gentleman, the Euro-supporting Chancellor of the Exchequer, or is it his comrade in arms, the Euro-sceptical Chief Secretary to the Treasury? How can Britain's national interest be properly represented when members of the Cabinet are in such open disagreement over European policy?

Mr. Clarke

I advise the hon. Gentleman to keep a straight face, even when asking frivolous questions. The last time that we debated the subject the Prime Minister made our position clear. We have negotiated an opt-out which means that the British are quite free from treaty obligations when deciding whether to join in economic and monetary union if the other member states ever decide to go ahead with it. Meanwhile we play a constructive part in the technical preparations, so that when we make our choice, if ever we have to, we have had some hand in designing what we are being asked to confront.

Mr. Legg

Will my right hon. and learned Friend accept my congratulations on the excellent improvement in our trade figures, and will he further accept that that improvement is largely due to his policy of maintaining a floating currency? Does he agree that such a marked improvement in our trade policy would not have been possible if we had remained in the exchange rate mechanism at DM2.90 to the pound, and that it certainly would not have been feasible under a single currency?

Mr. Clarke

I agree with my hon. Friend in his praise of our trade performance—in 1994 we performed spectacularly well—but I disagree with him if he believes that devaluation of the currency is the only way in which this country's competitiveness has been restored. That happened because of the success of British industry and commerce in making itself competitive in world markets, and the Government's success in keeping down inflation at home and our business-friendly policies that support exports overseas. If my hon. Friend analyses the trade figures he will find that the myth that it all happened only because we left the ERM is no longer sustainable.

Mr. Gordon Brown

Does the Chancellor still reject a referendum ever being held on a single currency—yes or no?

Mr. Clarke

If the question ever arises, it will be a matter for the Parliament of the day to decide how to take the decision.

Mr. Budgen

May I refer the Chancellor to his remarks of 10 days ago, in which he said that the Euro-sceptics formerly in his party were undermining the value of the pound? If that is true, will he explain why it is important, or does he have some secret exchange rate target so as to bring us back into the ERM which he so much favoured?

Mr. Clarke

My hon. Friend produces about the fifth or sixth version of what I said in a press conference in Brussels when I was asked why the pound at the time was declining when I was confident that the economic fundamentals in this country were going very well. One of the remarks that I made was that I accepted that the divisions in the governing party about Europe were not exactly helpful to market confidence. That has been turned into my personally blaming Lord Tebbit for the decline in the pound, which was not what I was saying. The political uncertainty gives rise to some weakness occasionally in the exchange markets because people fear the return of a Labour Government. The more the Conservative party looks like a strong and determined governing party, which I believe will last the course of this Parliament, and maintains the present improving economic climate, the stronger sterling and the stronger confidence overseas in this country's economy will be.