EU Economic Convergence (Hansard, 22 July 1999)

§ 9. Mr. Desmond Swayne (New Forest, West)
What estimate he has made of the rate at which the UK economy has achieved sustained convergence with other EU countries since his statement to the House in October 1997. [91101]

§ The Economic Secretary to the Treasury (Ms Patricia Hewitt)
The Government have said that there is no realistic prospect of the UK economy demonstrating, before the end of the current Parliament, convergence that is sustainable and settled rather than transitory. We have put in place policies for economic stability that have delivered low inflation and the lowest interest rates for more than 30 years, but the biggest threat to economic stability and to convergence would be a return to Conservative policies of boom and bust.

§ Mr. Swayne
Will the hon. Lady acknowledge that one of the principal causes of the accelerating divergence of the UK economy from the continental cycle is the historic and growing ownership of assets in the United States by UK companies, and of assets in the UK by United States companies? What does the hon. Lady intend to do about the coincidence of managerial decision making and culture to which that gives rise? Does she intend to introduce measures to restrict the ownership and purchase of such assets, in the same way as she has assisted the European Union in its assault on the transatlantic art market?

§ Ms Hewitt
Like so many Conservative Members, the hon. Gentleman seems to forget that 50 per cent. of our trade is with the European Union, but we have no need whatever to choose between our close relationship with the EU and our close relationship with the United States of America. I had hoped that he would congratulate the Government on the consequences of our policy of economic stability and growth, which has delivered a 39.6 per cent. reduction in unemployment in his constituency. We took the decision to make the Bank of England independent to secure economic stability and low interest rates. The Conservatives have opposed independence for the Bank of England, just as they have opposed all our other policies for growth and stability.

§ Mr. Bill Rammell (Harlow)
Does my hon. Friend agree that the granting of operational independence to the Bank of England has brought the greatest economic stability in this country in a generation? Will she confirm that she will resist the demands from the Conservative party to move away from operational independence?
On the specific issue of the single currency, does my hon. Friend agree that it is right and proper that we continue to monitor convergence and the degree to which we are meeting the criteria that we set for entry? It is right that, if we meet those criteria, we let the people decide the issue in a referendum. It would be totally wrong to give in to the Conservative party and to accept the demand that, whatever the circumstances and the national economic interest, we will not let the people decide the issue for an arbitrary period of 10 years.

§ Ms Hewitt
My hon. Friend is right. We took the tough decision to give the Bank of England operational independence. Every month for the past two years, the Conservative party has denigrated and opposed that decision. It will have no credibility left if it now tries to pretend that it is in favour of that policy. On the question of joining the single currency, the reality is that the Conservative party is now so extreme and so anti-European that it would oppose joining a single currency, even if it were good for the British economy, for business and for jobs.

§ Mr. Quentin Davies (Grantham and Stamford)
We have had some more bad examples this morning of the Government cooking the figures and trying to spin away the facts, not least in a thoroughly disreputable answer given to my hon. Friend the Member for West Chelmsford (Mr. Burns) about gold sales. Had the Chancellor—

§ Madam Speaker
Order.

§ Mr. Davies
Had the Chancellor quoted the sale price and the purchase price in constant prices—

§ Madam Speaker
Order. The hon. Gentleman must resume his seat when I am on my feet. He must also keep within the terms of the question on the Order Paper.

§ Mr. Davies
I am asking the Government how they will cook the figures or spin away the facts in comparing the growth rates in this country with those in the rest of the European Union. How will they explain away the fact that, in the last five years of the previous Parliament, we consistently had a higher growth rate than the rest of the EU, while this year and next year we shall have a lower growth rate than the EU average?

§ Ms Hewitt
The fact that the hon. Gentleman cannot explain away is that he is in favour of Britain's membership of the EU, while his Front-Bench colleague, the hon. Member for Arundel and South Downs (Mr. Flight), is against it and wants to withdraw. The divisions on the Conservative Front Bench on this issue will damage the national interest. This Government have delivered economic stability and the lowest interest rates for more than 30 years.

§ Mr. Denis MacShane (Rotherham)
Did my hon. Friend have a chance to read the remarkable article in the Financial Times two weeks ago, which reported the shadow Chancellor as saying that the euro would be a success? Has she noticed that, since that speech, the euro has gone up? Will she encourage the right hon. Gentleman to make more such speeches and unleash the passionate pro-euro feelings of the hon. Member for Grantham and Stamford (Mr. Davies), who, every time he opens his mouth at the Dispatch Box, sees the euro go up and converge with the pound? His great dream of entering the single market will then come about sooner than he hopes.

§ Ms Hewitt
My hon. Friend makes his point quite brilliantly. It is highly appropriate that the shadow Chancellor—the man who signed the Maastricht treaty—should now apparently be responsible for a rise in the value of the euro.