HL Deb 12 June 1997 vol 580 cc985-6

3.46 p.m.

Lord Mackay of Ardbrecknish asked Her Majesty's Government:

What is their policy towards the stability pact for the European single currency.

Lord Haskel

My Lords, I compliment the noble Lord on the topicality of his Question, which is on the front page of most of the newspapers this morning. My right honourable friend the Prime Minister has made it clear that it is unlikely that Britain will be in the first wave of membership of EMU. However, it is in everyone's interests, including ours, that EMU is built on a firm basis and that it succeeds. The stability pact is designed to promote sound public finances. The Government believe that sound public finances are necessary to provide a stable economic environment and the foundations for high and sustainable levels of growth and employment. The Government have set their economic policies on this course to achieve these objectives.

Lord Mackay of Ardbrecknish

My Lords, I thank the noble Lord for his reply and for his recognition of the topicality of the Question—which is what it is supposed to be. I am sorry that the Minister who is in charge of these matters at the Treasury, the noble Lord, Lord Simon of Highbury, has once again not come to the Dispatch Box to deal with these matters. Can I take it from the Answer given by the noble Lord that next week in Amsterdam his right honourable friend the Prime Minister will not support his fellow socialist M. Jospin, the Prime Minister of France, who wants consideration of the stability pact deferred so that the French Government can study it? Further, will his right honourable friend not be supporting M. Jospin in his desire to place less emphasis on an independent central bank and more on elected politicians?

Lord Haskel

My Lords, I am answering for the Government this afternoon. My noble friend Lord Simon will be here whenever he is required to be here. As to M. Jospin, it is not for me to comment on the position of other governments. The French have asked for time to allow their new government to consider these issues, which I believe to be a reasonable request. I am afraid that I am unable to speculate on what will happen next week. The Prime Minister will need to take a view on the proposals placed before him at the Amsterdam European Council and decide what is best in Britain's interests.

Lord Barnett

My Lords, recognising that the noble Lord, Lord Mackay of Ardbrecknish, does not yet know for whom he speaks, does my noble friend accept that there is need for stability within a monetary union? Therefore, is it not necessary for any country that seeks to join to have clear and sustainable convergence, even if it means that France and Germany are not able to join an economic and monetary union?

Lord Haskel

My Lords, I agree entirely with my noble friend. What is essential for the success of EMU is genuine convergence among the economies taking part. Any decision about Britain joining must be determined by a hard-headed assessment of Britain's economic interests. We have set out five economic tests: looking at the likely impact of EMU on investment, financial services, business cycles, keeping the flexibility to respond to any problems that might arise, and, what is vital, the effect of EMU on employment.

Lord Taverne

My Lords, will the Minister advise the Government, in approaching the criteria under the Maastricht Treaty and the rules under the stability pact, not to lose sight of their essential purpose, for which they are only an aid, which is to ensure that only those who can sustain a low rate of inflation can be feasible members of monetary union? I hope that the Government will not be hung up on the strict letter of the criteria and will not lose sight of the wood for the trees?

Lord Haskel

My Lords, I can assure the noble Lord that we shall not lose sight of the wood for the trees. The full title of the pact is the stability and growth pact. Stability is only part of EMU. We are equally concerned about its other aspects: employment, growth and investment. When we are satisfied with the entire package we shall make our decision.

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