HL Deb 26 October 1987 vol 489 cc307-8
Lord Ezra

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether, in view of the pegging of sterling to the deutschemark and other European Community currencies since February, there are any remaining obstacles to Britain's membership of the exchange rate mechanism of the European monetary system.

The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)

My Lords, the Government continue to keep the position under review.

Lord Ezra

My Lords, would the noble Lord not agree that at this time of enormous perturbation in the stock exchanges of the world every effort should be made to keep currencies stable? Would not Great Britain finally joining the exchange rate mechanism help to do that in the important European area? Is it not therefore surprising, sterling having openly cohabited with the exchange rate mechanism for the past nine months, that the Government should still be reluctant to legitimise the arrangement?

Lord Brabazon of Tara

My Lords, on the noble Lord's first point, the movements in the stock exchanges of the world are indeed very dramatic. I am very doubtful whether they would be any the less so if we were a member of the exchange rate mechanism. As I have said, the matter is kept under review. The Government have always said that there are arguments both in favour and against joining the mechanism. We will only join when satisfied that the balance clearly favours doing so.

Lord Bruce of Donington

My Lords, would it not be better to allow market forces upon which the Government place such store to blow themselves out a little before further consideration is given to this matter? Would not the noble Lord agree that the intellectual abilities of the Government would be far more advantageously employed in seeking to minimise the damage to the British economy that will undoubtedly ensue from the events of the last week?

Lord Brabazon of Tara

My Lords, I can assure the noble Lord that the powers we have to think about things that have happened to the British economy in the last week will be exercised. As I said earlier, I am extremely doubtful whether joining the exchange rate mechanism would have made any difference to what has happened in the last week.

Lord Paget of Northampton

My Lords, after the events of the last week, are the Government in a position to assure us that they have any currency to peg?

Lord Brabazon of Tara

My Lords, I am not certain I appreciate the intention of the noble Lord's remark. So far as sterling is concerned, it has been extremely firm in the last week and is even firmer today.

Lord Molloy

My Lords, could the noble Lord tell the House in outline at least what are the powers which the Government may be taking? Sterling is not so much being pegged at the moment; it is completely and absolutely bogged down. Could he please tell the House what are the powers that the Government might take, which he mentioned a moment ago?

Lord Brabazon of Tara

My Lords, I think the noble Lord has misunderstood me. I said that we must no doubt think, using our powers of thought, as to what might be done about the equity markets. I said that in answer to the question from the noble Lord, Lord Bruce of Donington. As regards joining the exchange rate mechanism, I do not see what that has got to do with it.

Lord Cledwyn of Penrhos

My Lords, in view of the acknowledged serious state of the economy as a result of the mess in which the financial markets, including the London market, have got themselves, is the noble Lord now telling the House that the Government are considering the matter carefully with a view to making a Statement which would give the country some assurance that the Government have any sort of policy at all?

Lord Brabazon of Tara

My Lords, certainly not. We are straying rather a long way from the Question on the Order Paper. What the noble Lord has implied that I said I certainly did not say.

Lord Tordoff

My Lords, would the noble Lord accept that he has not yet answered the second part of my noble friend's Question? It was clearly directed to the relationship between sterling and the deutschemark with which as he said we have been co-habiting for a number of months? When are the Government going to legalise that arrangement?

Lord Brabazon of Tara

My Lords, when the time is ripe.

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