§ LORD BALOGHMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government how they reconcile the Statement of the Chancellor of the Exchequer that he will not tolerate an interference with the re-expansion of economic activity by any restriction on the money supply with the resolution IV, No. 702, of the Council of Ministers of the Common Market of November 6, 1972, according to which Member States are obliged to reduce "progressively the rate of expansion in the money supply" by taking prompt action on the following: "restrictive action on interest rates, liquidity and the volume of credit"; resolutions to which Her Majesty's Government's representatives are reported to have consented.
§ THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)My Lords, there is no inconsistency between the policy of Her Majesty's Government and the resolution on measures to be taken against inflation that has been adopted by the Community's Council of Ministers. The resolution associates the acceding countries with the objectives of reducing inflation, without committing them to the particular measures set out in a number of the Articles, including Article 4. Nevertheless, the Government intend to maintain the progress made in recent months in moderating the growth of money and credit, from the very fast rates recorded earlier this year to rates consistent with their objective for the growth of the economy.
§ LORD BALOGHMy Lords, does the Minister realise how delighted I am with that Answer, because it shows quite clearly that the Government have no intention of implementing the resolutions of the European Council? It therefore completely bears out our contention that we have subscribed to things to which we cannot hold, just as we have subscribed to the snake in the tunnel and the snake slipped.
§ LORD DRUMALBYNNo, my Lords, I do not realise that at all, and it is not the case. The noble Lord will realise that monetary and budgetary policies remain the responsibility of national Governments. The Chancellor of the Exchequer has made it clear that monetary policy has a major role to play in the battle against inflation, and that he would wish to see the effects of the standstill on prices reflected in the money supply figures. But a very restrictive monetary policy would not be the appropriate method of dealing with the present inflationary pressures, and would involve unacceptable costs in terms of higher unemployment and lost output.