HC Deb 18 July 2002 vol 389 cc413-4
7. Mr. John Burnett (Torridge and West Devon)

If he will make a statement on the impact of recent exchange rate fluctuations on British business. [68404]

The Paymaster General (Dawn Primarolo)

The Government publish two assessments of economic developments and prospects each year, one at Budget time and the other in the pre-Budget report. The forecast published in the April Budget was based on all the relevant information available at that time. We will update our assessment of the economy as usual in the autumn pre-Budget report, taking account of all the relevant factors.

Mr. Burnett

In the unlikely event that the Chancellor can declare his five tests for euro entry to have been met, what will concern British business and the rest of the country is the proposed sterling-euro exchange rate at entry. At what stage will the Chancellor declare that rate? Will the Paymaster General confirm that it will be before any referendum, and also that there will be just one assessment during the present Parliament?

Dawn Primarolo

The hon. Gentleman will have to be patient, and wait for the assessment of the five economic tests in the Government's announcement.

Roger Casale (Wimbledon)

May I draw my right hon. Friend's attention to an article by Roger Clews of the Bank of England's monetary instruments and markets division? On page 182 of the current "Quarterly Bulletin", he reminds us that the United Kingdom is part of the wider world economy, and furthermore that the strength of international influences on domestic financial markets varies over time, being especially high at times of financial market stress. Is it not the case that the platform of economic stability that the Chancellor has established is the best protection in the long term from shocks emanating from the world economy—to the extent that the greatest risk of a shock to the UK's financial markets in the future would be a return of the Conservative Government and their discredited policies of boom and bust?

Dawn Primarolo

As my right hon. Friend the Chancellor has repeatedly told the House, what is essential is that the economic fundamentals are sound—which means low inflation, low interest rates, sound public finances and stable growth.

Mr. John Redwood (Wokingham)

In recent years, the pound has moved much more dramatically against the euro than against the dollar. Does that not show that we are if anything converging with America and not with euroland? Does the Minister agree that there is no point in assessing other convergence criteria while the exchange rate is gyrating so wildly in terms of the euro? Does that not show that we are nowhere near having converged?

Dawn Primarolo

The right hon. Gentleman is putting his old proposition. What the Government will do is assess the five economic tests, ensuring that the Government's best economic interests—[Interruption.]—the country's best economic interests are met and the best decisions are made for the country, both by Parliament and by the people.