HC Deb 13 February 1997 vol 290 cc458-9
10. Mr. Ainger

To ask the Chancellor of the Exchequer if he will make a statement on the prospects for Britain being one of the initial participants in European monetary union. [14181]

Mr. Kenneth Clarke

I am confident that the United Kingdom will be able to achieve and sustain the convergence criteria of low inflation, low fiscal deficit and low public debt, and they will contribute to our policy of creating jobs and raising living standards in this country. At the moment, I believe that it is unlikely, although not impossible, that enough countries will be sufficiently convergent by 1 January 1999 for EMU to go ahead on that date. If EMU were to go ahead at any date without sufficient convergence, we would not be part of it.

Mr. Ainger

Does the Chancellor agree with the Foreign Secretary's view that joining EMU would mean a loss of sovereignty, or does he agree with the head of Toyota and the chairman of Unilever that failure to join EMU would mean a loss of jobs? Which is it? Which is his position, and who speaks for the Government on EMU?

Mr. Clarke

As the hon. Gentleman is well aware, the answer that I just gave is an impeccable statement of the policy that my right hon. and learned Friend the Foreign Secretary and I last gave together outside Downing street, and the policy is perfectly clear. All international engagements involve some pooling of sovereignty, and the political implications of any international engagement are a matter that the House and the public always want to discuss whenever such an event occurs.

As for the opinions of leading business men, they were not commenting on sovereignty; they were commenting, as they are entitled to do, on what they thought would be the implications for their businesses. I believe that both the gentlemen quoted are perfectly content with the Government's policy that we keep those options open, that we contribute to the evolution of policy and that we keep our eye on the ball, which is British jobs, British prosperity and the future well-being of this country.

Mr. Sweeney

Is my right hon. and learned Friend aware that the Allensbach Opinion Research Institute's most recent survey in Germany revealed that only 5 per cent. of Germans are wholly in favour of the euro, about 15 per cent. are mildly in favour and 80 per cent. are against? Does he agree that the most important convergence criterion that needs to be satisfied is the deficit in public support?

Mr. Clarke

I am not familiar with the Allensbach survey and I shall take the opportunity of catching up with the figures. I doubt that people responding in Germany were concentrating on the key issues of British jobs, British prosperity and the well-being of UK Ltd. I hope that in this country we shall pay attention to British jobs and British prosperity to the same extent as German citizens pay attention, no doubt, to German jobs and German prosperity, when and if ever we have to take decisions on such matters.

Mr. Shore

The prospect of Britain joining the single currency on 1 January 1999 appears to be receding, and I think that we are all grateful for that. I know that the Chancellor is fastidious about the integrity of the convergence criteria. Will he make it plain that he will not accept the type of fudge that the French have gone in for by transferring telecom pensions against their 3 per cent. deficit, and will he also say that, if the Germans do hit the 3½ per cent. of GDP in their borrowing requirement this year, as it now appears that they will, he will exert himself to put a stop to other European countries joining a fudge currency on 1 January 1999?

Mr. Clarke

There is no point in commenting on whether the chances are advancing or receding on any of those things. We are pursuing a cautious and pragmatic approach based on our best judgment of British interests, ensuring that British influence is brought to bear on the evolution of policy, which is of great importance whatever happens to the future of the European market on which we so depend.

I agree with the right hon. Gentleman that accounting devices of the type that he describes and others should play no part whatever in such decisions. What matters is the underlying structural fiscal deficit that has been achieved by a specific country. What matters even more is whether a low structural deficit is likely to be sustained for the foreseeable future by that country, if it were to go into economic and monetary union. I assure the right hon. Gentleman that I shall continue to argue that point as strongly in the councils of Europe, in respect of all member states, as I have in the past.