European Central Bank (Hansard, 7 June 2000)

§ Lord Renton of Mount Harry
asked Her Majesty's Government:
What is their assessment of the performance to date of the European Central Bank.

§ Lord McIntosh of Haringey
My Lords, the primary objective of the European Central Bank is to maintain price stability in the euro area, defined as an annual increase of below 2 per cent in the Harmonised Index of Consumer Prices (HICP). In April 2000, euro area Harmonised Index of Consumer Prices stood at 1.9 per cent.

§ Lord Renton of Mount Harry
My Lords, I thank the Minister for that Answer. However, perhaps I may point out that my Question asks what the Government think of the performance of the European Bank and not just for the statistics he mentioned. Surely it is time for the Government to come off the fence about their attitude to the European Central Bank and the euro, so that this country can know far more clearly where the Government stand on these key issues. Does the Minister agree that, if we had been in euro 11 from the start, our inflation rate would probably be higher than it now is; our central bank interest rate would be nearer 4.5 per cent than 6.5 per cent, and our currency in export terms would be 10 to 15 per cent lower? Is that a fair assessment? Does the Minister think that that would be a good achievement?

§ Lord McIntosh of Haringey
My Lords, I am sorry that the noble Lord does not like factual answers to his Questions. I should have thought it was obvious from the Answer I gave that the Government have always supported the European Central Bank in its primary objectives. We did so at the meetings at which the European Central Bank was set up. Our assessment is the factual one that it has been achieving that primary objective. He is asking me to speculate on matters which are not the responsibility of Her Majesty's Government. I am surprised that he should do so.

§ Lord Barnett
My Lords, perhaps I may revert to the Question on the Order Paper. Whatever the assessment of the Government on the work of the ECB, is it not irrelevant in the sense that, while we are outside the eurozone, there is nothing we can do about it? Would it not be better if the Government at least gave an indication of when we might expect a referendum to let the public decide?

§ Lord McIntosh of Haringey
My Lords, in a Statement made by the Chancellor in October 1997, the Government made clear that the decision on whether or not to enter the euro is primarily an economic one and would be based on economic considerations. It is unlikely that there will be a stable resolution of those economic considerations during this Parliament.

Lord Renton
My Lords, perhaps I should make clear that I did not consult my noble friend before asking this 1119 Question. Bearing in mind the effects that the decisions of the European Central Bank can have upon the economy of each of the European countries which have the euro as their currency, can the Minister make clear to whom the bank is answerable and responsible?

§ Lord McIntosh of Haringey
My Lords, the European Central Bank was set up with the agreement of the 11 European countries in the eurozone. There is a Council of Finance Ministers of those 11 countries. The relationship between the European Central Bank, the 11 Finance Ministers and their governments is well established.

§ Lord Marsh
My Lords, does the Minister agree that it is unfair to criticise the European Central Bank and that it deserves congratulation? Can he confirm that no other central hank in history has had to cope with 11 different governments, all with differing views, and with trying to keep one interest rate? Is it not amazing that the EC B has not done even worse than it has?

§ Lord McIntosh of Haringey
My Lords, I neither congratulate the European Central Bank nor condemn it for what it has done.

§ Lord Ezra
My Lords, the Minister mentioned the Finance Ministers in the 11 eurozone countries. What are the relations between those 11 Ministers and the Ministers of those countries which are within the European Union but not in the eurozone? There have been recent reports of differences of opinion. Are those reports correct?

§ Lord McIntosh of Haringey
My Lords, the Ministers of the 11 countries in the eurozone have regularly met together since the euro was first established. The finance Ministers of the 15 countries in the European Union meet together in ECOFIN, as they have done since and before the euro was established. I am not aware of any general disagreements between them. If the noble Lord has a specific question in that regard, perhaps he will put it to me.

§ Lord Desai
My Lords, does my noble friend agree that the Bank of England is a member of the European system of central banks and that we can make our contribution through that institution?

§ Lord McIntosh of Haringey
My Lords, yes. We can and do make our views known through the European system of central banks.

§ Lord Lamont of Lerwick
My Lords, does the Minister agree with Mr Prodi's statement in Denmark that it is not possible for a country to withdraw from the European single currency, or with his statement in the Spectator that it is possible for a country to withdraw from the single currency?

§ Lord McIntosh of Haringey
My Lords, I was aware of the statement of Mr Prodi that it was possible to withdraw. I was slightly surprised when I read it. It has 1120 always been our understanding that was an irreversible decision to enter the European single currency.

§ Lord Stoddart of Swindon
My Lords, does my noble friend agree that there are constitutional issues involved in whether or not we enter the euro, as well as financial and economic ones? Also, can he say whether we are converging towards the five tests for entry or diverging from them?

§ Lord McIntosh of Haringey
My Lords, we have always recognised that the joining of monetary policy in the European single currency is a pooling of sovereignty. That is clearly a constitutional issue. As to the changes in the adherence to the live economic conditions, the Government will make an assessment of that in due course. It is not appropriate to do so at the moment.

§ Lord Campbell of Alloway
My Lords, why did the Minister kick a relevant question of my noble friend Lord Renton of Mount Harry into touch?

§ Lord McIntosh of Haringey
My Lords, I am not very good at sporting metaphors. I do not understand the question.