Euro Currency and EMU (Hansard, 2 December 1997)

§ Lord Haskel
My Lords, there are very few constraints on UK firms transacting business in the euro. It is like any other foreign currency. Companies are able to use foreign currencies for a wide range of transactions in the United Kingdom.

§ Lord Randall of St. Budeaux
My Lords, I thank my noble friend for his most encouraging reply. Since there are few constraints on the early use of the euro, does my noble friend agree that it can bring enormous advantages not only to businesses but to the general public? Does he also agree that action needs to be taken to ensure that the country is prepared for its use?

§ Lord Haskel
My Lords, my noble friend is right to recognise that business was frustrated by lack of preparation. The Government have embarked on a number of initiatives. We have published two guides: one by my noble friend Lord Currie on the pros and cons of EMU and one on the practical implications for business. We have set up two groups: a business advisory group to provide a channel of communication between business and government and a standing committee to oversee the preparatory work in the private and public sectors. We have also set up a series of regional conferences for the New Year and carried out a number of other initiatives.

§ Lord Redesdale
My Lords, the noble Lord said that the euro is to be treated like any other foreign currency. In the opinion of the Government, is the euro a foreign currency?

§ Lord Haskel
My Lords, at present for the purposes of companies trading it will be dealt with on the same basis as a foreign currency until we decide whether to join the European Monetary Union.

§ Lord Beloff
My Lords, has the Minister read the article by Professor Martin Feldstein of Harvard in the current issues of Foreign Affairs in which he points out that the EMU is likely to prove a massive disaster? In the light of that, does the Minister agree that any businessman transacting business in that currency deserves to have his head examined?

§ Lord Haskel
My Lords, I am afraid that I have not read the article by Professor Feldstein but I shall certainly do so. Businessmen cannot take these decisions in isolation. They are dependent upon their customers,
1244 their suppliers, and what others in business do. If their customers or suppliers insist on using the euro those companies will have very little choice but to accept it.

§ Lord Barnett
My Lords, referring to the intervention of the noble Lord, Lord Beloff, does my noble friend agree that anyone foolish enough to disregard the euro would be equally mad?

§ Lord Haskel
My Lords, I agree entirely with my noble friend. Any company that disregarded the euro would put itself at a competitive disadvantage.

§ Lord Marsh
My Lords, does the noble Lord accept that a number of noble Lords are slightly puzzled by this exchange? All companies are used to dealing in different currencies, whether it be dollars or any other. For once I agree with the noble Lord, Lord Barnett. Whether or not the UK joins the European Monetary Union, what is so peculiar about companies using the euro if it is available?

§ Lord Haskel
My Lords, there are no difficulties at all in companies dealing with the euro, as they deal with dollars, francs or whatever.

Lord Bruce of Donington
My Lords, is my noble friend aware that the Question itself does not deal with transactions that are limited to the supply of and payment for services but refers to preventing, British business from transacting business"? In view of the fact that some time may elapse before formal entry into economic and monetary union, is it not wise for Her Majesty's Government to give the usual warning that the value of the euro, like other currencies, can go down as well as up and that there are certain risks attached to the settlement of transactions in any currency, including the euro?

§ Lord Haskel
My Lords, my noble friend is absolutely right. The value of any currency can go up or down. The risk is the same for the euro as with any other currency.

§ Lord Mackay of Ardbrecknish
My Lords, is the noble Lord aware that I am as puzzled as the noble Lord, Lord Marsh, about this exchange? It appears to me that if the euro comes about the City and manufacturing industry will deal in it as they deal in the yen, the dollar or any other currency. I suspect that his noble friend was really asking whether the euro would be legal tender if this country did not join.

§ Lord Haskel
My Lords, it will be legal tender as any other foreign currency. Many British citizens will start to use the euro very soon. For example, if they use 1245 their credit cards on the Continent after the introduction of the euro it is likely that their accounts will be debited in euros.

§ Lord Swinfen
My Lords, does the Minister agree that all sound currencies are backed by a lender of last resort? Who will be the lender of last resort for the euro?

§ Lord Haskel
My Lords, I imagine that that will be a matter for the European bank.

§ Lord Stoddart of Swindon
My Lords, is my noble friend aware that what worries some of us about the Question is the assumption that we are going into the single currency?

§ Lord Plant of Highfield
No.

§ Lord Stoddart of Swindon
Yes indeed, my Lords, if one looks at the Question. There is an assumption there that we are going into Europe. Will my noble friend confirm that the government position is, first, that we shall not enter into the single currency until there is economic convergence; and, secondly, until after there has been a referendum of the British people?

§ Lord Haskel
My Lords, I can confirm that we need a period of stability and settled convergence before membership can be considered. There will be a referendum of the British people.

§ Lord Mackay of Ardbrecknish
My Lords, I return to my question about legal tender. I am aware that if I use my Visa card in Italy I can pay in lira, and I will then pay my bank in sterling. My question was: will the euro be legal tender in this country? Will I be able to go into a shop on my return and use euro notes rather than sterling? Those are my questions.

§ Lord Haskel
My Lords, not until we join the European single currency.