§ 4. Mr. Graham Brady (Altrincham and Sale, West)
What assessment he has made of Belgium's compliance with the Maastricht convergence criterion on Government debt as a proportion of gross domestic product. 
§ The Chancellor of the Exchequer (Mr. Gordon Brown)
The European Monetary Institute and Commission convergence reports provide a comprehensive assessment of the degree of convergence of member states against the treaty criteria and of the importance of economic reform. Those and all factors will be taken into account, and Finance Ministers will also make a statement on fiscal stability and economic reform.
§ Mr. Brady
Had the Chancellor given a straight answer, he would of course have said that both Belgium and Italy have debt at more than twice the level that is acceptable under the convergence criteria. Does he accept that allowing the euro to go ahead without proper convergence of the 11 currencies is one of the reasons why it will be a soft currency, and that the value of sterling will be forced up still further? Does he share my concern that the prediction of the north-west chambers of commerce, that manufacturing in the region will go into recession this year, will come true because of his policies on the matter?
§ Mr. Brown
I do not think that what is happening to manufacturing industry this year has to do with what the hon. Gentleman says about Belgian debt. The Government, as chairman of ECOFIN, will listen to all member states. We are studying the reports of the European Monetary Institute and the Commission, and I hope that my right hon. Friend the Leader of the House will announce later today an opportunity for hon. Members to debate those matters either on the Floor of the House or in Committee before 1 May.
§ Mr. Bill Rammell (Harlow)
The Belgian Government deficit and debt ratio have declined significantly since 1993, showing a clear downward path, in accordance with the convergence criteria. Does my right hon. Friend agree that the Conservatives' misrepresentation of what is happening in other European economies is a clear attempt to undermine the single currency and make it fail, regardless of the consequences for Europe in general and our economy in particular?
§ Mr. Brown
I am grateful to my hon. Friend, who rightly points out the change that has taken place in the diminished Conservative party since the general election. Before 1997, Conservative Members were opposed to Britain joining a monetary union; now they seem to be opposed to anybody else joining it. They are not fit for government. They are not fit for opposition.
§ Mr. Edward Davey (Kingston and Surbiton)
When making a similar assessment for the United Kingdom to the one that he has made for Belgium, how does the Chancellor intend to assess sterling's record on stability and the appropriate level for it to enter a single currency? When the exchange rate mechanism is effectively disbanded on 1 January 1999, will he consider any type of exchange rate policy for the pound with respect to the euro?
§ Mr. David Winnick (Walsall, North)
With 17 million unemployed in the Community countries, what sense is there in those countries being actively encouraged to pursue acute deflationary policies that can only further increase unemployment? I for one am not an enthusiast for the Maastricht criteria, which were negotiated and warmly endorsed by the previous Government.
§ Mr. Brown
There is no evidence that high inflation and unsustainable budget deficits have produced higher employment. We have to consider what action countries throughout Europe can take to deal with unemployment. I find it encouraging that countries in Europe are following Britain's example in having a welfare-to-work programme and tackling the problems of youth and long-term unemployment. I look forward to progress in reducing the unacceptably high unemployment right across Europe.
§ Mr. David Heathcoat-Amory (Wells)
Has the Chancellor read the Bundesbank report to the German Government, which—[HON. MEMBERS: "Yes."] Well, he should have, because it records not only that Belgium and Italy have more than twice the permitted level of debt for joining the single currency but that, on their published plans, they have no chance whatever of getting down to the permitted level within the next 10 years. Why does the Chancellor not produce his own authoritative report on the fudging and fiddling that are going on? Why is he simply waving the whole project through in a weak and indecisive way, despite the damage to our currency and the excessively high value of the pound, about which he seems not to care?
§ Mr. Brown
The right hon. Gentleman makes a point about the Bundesbank report as if it has come out against those countries' membership of the single currency. It has done no such thing. On his policy on the entry of Italy, Belgium or any other country, it is interesting to note that the Conservative party now seems to be against anyone joining economic and monetary union.
§ Mr. Geraint Davies (Croydon, Central)
Does my right hon. Friend agree that news of a prospective recession due to a soft euro does not fit with the facts that the exchange rate is moving down, that the Financial Times reports today the prospect of interest rates peaking and moving down and that we have the lowest level of benefit claimants for 17 years? That is hardly a recession.
§ Mr. Brown
I agree with my hon. Friend. The progress that we can make in reducing unemployment and getting into work people who have been either registered as unemployed or who were never registered as unemployed in the Conservative years should be welcomed by everyone.
On the movement of exchange rate and interest rates, the Bank of England makes it clear in its inflation report that action had to be taken to deal with incipient inflation in the economy. It has taken that action and will meet next month to review the position.