HC Deb 23 April 1998 vol 310 cc961-2
9. Dr. Vincent Cable (Twickenham)

If he will make a statement on progress towards the introduction of EMU. [38250]

The Economic Secretary to the Treasury (Mrs. Helen Liddell)

Preparations for the launch of stage three of economic and monetary union have continued throughout the UK presidency of the EU. In the presidency, the Government are committed to ensuring that the single currency is launched smoothly and on time, taking into account the views of other member states.

The key decisions on which member states will join the single currency will be taken over the first weekend in May on the basis of the Commission and European Monetary Institute reports.

Dr. Cable

Does the Economic Secretary acknowledge that, as EMU is now proceeding with 11 members, there is some risk of the remaining four being excluded from key economic management decisions in Europe? As the Government have declined to accept our advice on proceeding with early entry and an early referendum, will the hon. Lady set out the sort of conversations the Government had with Greece, Denmark and Sweden to ensure that they are not marginalised on economic policy making?

Mrs. Liddell

We failed to take the hon. Gentleman's advice because, on this as on other matters, it is consistently wrong. The hon. Gentleman asks about the applicant countries for the euro zone. The decision on that will be made next week in full consultation with all member states over the May bank holiday weekend. During our presidency we shall do our utmost to ensure that the decision is taken in an orderly and smooth manner.

Mr. Charles Clarke (Norwich, South)

Does my hon. Friend accept that the real meaning of the reports by the European Commission, the European Monetary Institute and the Bundesbank, is that economic and monetary union will go ahead from 1 January 1999 with 11 members? Does she agree that it is about time all parties in the House, including both Conservative parties, faced that fact and accepted it and addressed the real implications for this country of that change?

Does she further agree that one of the implications may be that, from 1 January 1999, the euro will circulate more widely in the United Kingdom than people, including those in the Treasury, currently expect? I cite the example that was given by my hon. Friend the Member for Rotherham (Mr. MacShane) about today's Vauxhall pay negotiations. Does she accept that it is necessary for the Treasury to address more urgently the possible implications of the euro spreading in this country faster than most people expect?

Mrs. Liddell

My hon. Friend is unnecessarily generous to Opposition Members. I thought that there were singularly more than two—[Interruption.] I am sorry, not singularly. I thought that there were multiples of views on Europe on the Conservative Benches.

My hon. Friend makes a very important point about the progress that has been made towards convergence. For example, average EU inflation fell from about 4 per cent. in 1993 to an estimated 2 per cent. last year. The point that my hon. Friend makes about companies' preparations in this country for the use of the euro after 1 January 1999 contrasts with the myopic attitude of the Conservative party, which refuses to accept reality and, because of the attitude that it adopted when it formed the Government, held back companies' preparations.

As part of the Government's preparations, the Treasury has established with the Department of Trade and Industry an EMU preparation unit. Several road shows are being held throughout the country. A considerable amount of material is now being made available to businesses—especially small and medium enterprises—and the provision of such material will continue and escalate once the decisions are taken next weekend.

Sir Peter Tapsell (Louth and Horncastle)

As it is generally agreed that the success of EMU will crucially depend on the quality of whoever is appointed as president of the European central bank, is it not disquieting that, despite the clear provisions of the Maastricht treaty that the central bank, when established, shall not be subject to national pressures of any kind, both Germany and France obviously regard it as essential to their national interests that their nominees should be appointed governor of that bank?

Is the Economic Secretary aware of the widely reported horse-trading going on between Germany and France, to the effect that whoever is appointed, whether the French or German nominee, will agree to step down after four years—despite the fact that the Maastricht treaty lays down that it should be an eight-year term—to make way for the nominee of the other great power? Is that not an augury of the way in which Europe will be run in future; Germany and France will stitch everything up behind the scenes and then impose their wishes on the smaller countries?

Mrs. Liddell

I am tempted simply to say no, but I shall make the point that there is no German nominee for the presidency of the European central bank. As my right hon. Friend the Chancellor of the Exchequer said, the president of the central bank must be in place by July. We shall do our utmost to ensure that the decisions are taken in an orderly manner in due course, and we hope that those decisions will be taken soon.