Single Currency (Hansard, 9 November 2000)

§ 6. Mr. Christopher Gill (Ludlow)
What estimate he has made of when the UK will join the single currency.[135953]

§ The Chancellor of the Exchequer (Mr. Gordon Brown)
The determining factor underpinning any Government decision to join the single currency is 427 whether the economic case for the UK joining is clear and unambiguous. The Treasury will make another assessment of the five economic tests early in the next Parliament.

§ Mr. Gill
Is the Chancellor prepared to allow a further depreciation of sterling against the United States dollar, to the point at which the supposed overvaluation of the pound against the euro is eliminated? In view of the brevity of the question, will he simply answer yes or no?

§ Mr. Brown
I do not have an exchange rate target, which is what the hon. Gentleman's question implies. I thought that the Conservative party had learned the lessons of the 1980s, when they took us into the exchange rate mechanism at the wrong exchange rate and caused enormous problems. We will make a decision on the single currency based on five economic tests, but we will not return to the situation to which the Conservatives brought us by running a dual inflation and exchange rate target. I should have thought that the hon. Gentleman would be sensible enough to realise that that is not the way forward.

§ Mr. Dale Campbell-Savours (Workington)
While the rate of sterling is high, in some industries, such as the steel industry, it is also true that exports are growing by 8 per cent., as my right hon. Friend said yesterday. He did not labour that figure. Why are Britain's exports increasing on that scale at a time of high sterling?

§ Mr. Brown
Despite the difficulties with the exchange rate—I have always understood the resultant problems that many manufacturers face—manufacturing industry is responding and growing. It will grow next year. Exports have increased this year by 5 or 6 per cent., and they will grow by 6, 7 or 8 per cent. next year. Those are our projections based on the information that we hold. That is another example of how, despite the difficulties of the exchange rate, we are creating the stability in the economy that is necessary for investment and growth.
The contrast with the previous Government is all too clear to businesses. Under the Conservatives, with interest rates at an average of 11 per cent., interest rate costs would have been nearly £2 billion higher for business at this stage. Under Labour, average interest rates are 6 per cent.

§ Sir Peter Tapsell (Louth and Horncastle)
Will the Chancellor confirm that, in anticipation of Britain joining the single European currency, the Treasury and the Bank of England have since 1 January 1999 bought large amounts of euros? It has been estimated that the operation losses so far amount to approximately £2,000 million, or treble the loss on the dome. Is the Chancellor in a position to tell us the official Government estimate of the losses on those euro operations?

§ Mr. Brown
I am sorry that the hon. Gentleman is so out of date because we publish the figures for the interventions in the exchange rate market and he can consult them. His figure is wrong. He should compare our sensible approach to such matters with the huge losses that the Conservative Government incurred when we had to leave the exchange rate mechanism and the shadow Chancellor was in the Treasury.

§ Sir Peter Tapsell
On a point of order, Mr. Speaker.

§ Mr. Speaker
Order. After questions. I call Mr. David Taylor.

§ Mr. David Taylor (North-West Leicestershire)
Despite the rampant and terminal europhobia that habitually grips the Conservative Benches, does not my right hon. Friend agree that the British economy diverges dramatically from the eurozone and that, without convergence, a common language, interstate transfers and mobility of labour, the prospect of joining the euro in the next decade is thankfully remote?

§ Mr. Brown
We have set out five economic tests, which will be assessed early in the next Parliament. However, the difference between me and the Conservative party is that I see the benefits in principle of joining the single currency, whereas Conservative Members are divided about whether they are against it in principle or simply against it in principle for one Parliament.
On 1 May 1999, the shadow Chancellor, the right hon. Member for Kensington and Chelsea (Mr. Portillo) said that a single currency would mean giving up the government of the UK. [HON. MEMBERS: "Hear, hear."] No British Government can give up the government of the United Kingdom. That is impossible. The hon. Member for Buckingham (Mr. Bercow), who is a Front-Bench spokesman, agrees with the shadow Chancellor. When the right hon. Member for Kensington and Chelsea was asked the same question on "Breakfast with Frost" on 27 February, he said that he would not say that he was a never man. What sort of position does the Conservative Front Bench take?