HL Deb 31 October 2000 vol 618 cc784-6

2.44 p.m.

Lord Willoughby de Broke asked Her Majesty's Government:

Whether they intend to participate in further operations in support of the euro.

Lord McIntosh of Haringey

My Lords, as the noble Lord will appreciate, in view of the market sensitivity of this issue, it would be inappropriate for me to comment.

Lord Willoughby de Broke

My Lords, I thank the Minister for that uninformative reply. Does he agree that the most recent intervention in favour of the euro in September was not an unqualified success as the euro now stands somewhat below the rate at which it stood before the intervention? Does he further agree that the problems of the euro have to do with the fundamental difficulties of a euro-zone economy, as people do not want to invest in the euro? Does he accept that intervening is about as much good as giving a patient an aspirin when what he needs is a heart transplant?

Lord McIntosh of Haringey

My Lords, I do not know why the noble Lord should be so surprised at my first Answer. He did not seriously think that I would announce from this Dispatch Box that at some time in the near future we would embark on a support intervention for the euro or indeed for any other currency. I have made it clear from the very beginning that intervention is applicable only in very rare circumstances. As to whether the intervention in September was a success, I think it is difficult to say. There was a stabilisation of the euro for some time after the intervention took place. I do not think that anyone could make a judgment as to whether the subsequent decline in the value of the euro was greater or less as a result of the intervention.

Lord Shore of Stepney

My Lords, perhaps I may—

Lord Grenfell

My Lords, is my noble friend aware—

Noble Lords


Lord Williams of Mostyn

My Lords, the feeling seems to be that we should hear from the noble Lord, Lord Shore.

Lord Shore of Stepney

My Lords, I congratulate my noble friend on the wisdom and common sense of his reply. Will he please communicate to the Governor of the European Central Bank similar advice to that which he has given in responding to that question today? If he did, would there not be just a chance that the euro might begin to stabilise?

Lord McIntosh of Haringey

My Lords, I am grateful for that unusual compliment from my noble friend Lord Shore. I am not sure quite what advice he is asking that I should give to the Governor of the European Central Bank, particularly as we are not among his subjects, so to speak. My noble friend will know, as the House will know, that the intervention which took place in September was not the initiative of the European Central Bank but of G7, including the Bank of Japan and the Federal Reserve Bank.

Lord Newby

My Lords, does the Minister agree that the real lesson of the intervention is that the UK is now a bit player in world monetary affairs, that the decisions on intervention in support of the euro were in essence taken by the US, the Japanese and the EU, and that the Bank of England tagged along meekly behind, after the real discussions had taken place and the real decisions had been taken? Is that not the real lesson of being outside the euro-zone?

Lord McIntosh of Haringey

My Lords, the noble Lord is clearly more privy to the internal discussions within G7 than I am. It is a matter of fact that our participation in the intervention in September was relatively small in comparison with that of other countries, but I cannot accept any of the noble Lord's further speculation.

Lord Grenfell

My Lords, is my noble friend aware how we on these Benches would have been most fearful for the continuation of his genial, authoritative and reassuring presence on the Front Bench if he had uncharacteristically confounded the House by seeking to satisfy the noble Lord, Lord Willoughby de Broke, on the substance of his Question?

Lord McIntosh of Haringey

My Lords, I do not think that the noble Lord, Lord Willoughby, expected an answer to his Question in the terms in which it was couched. We all recognise that euro-sceptics around the House seek a variety of opportunities to discuss their antagonism or support for the euro. The House is none the poorer for that.

Lord Saatchi

My Lords, if the Minister does not want to deal directly with my noble friend's Question, perhaps I may ask him to cast back his mind to 9th October, which was the day that he performed his extraordinary volte-face on the subject of intervention in the foreign exchange markets to support the euro. I remind him of what he said. He justified the 180 degree U-turn in the Government's position by saying: Circumstances change and we change with them; if we did not we would be very foolish".—[Official Report, 9/10/00; col. 4.] Does the Minister agree that that kind of unreliability and change of mind is what in the end causes the public to lose faith in politicians of all kinds?

Lord McIntosh of Haringey

My Lords, I recall precisely what I said on 9th October. The noble Lord, Lord Blackwell, asked me whether I still agreed with what I had said in March. I do not usually refer to what I have said in the past, but I shall repeat my words; namely, that, attempts to intervene are unlikely to have the desired effect in most cases".—[Official Report, 28/3/00; col. 729.] That was true in March, it was true on 9th October and it remains true today, 31st October.

Baroness Williams of Crosby

My Lords, does the Minister agree with the comment made during evidence recently given to the Delegated Powers and Deregulation Committee by Eddie George, the Governor of the Bank of England? He stated that: The integration of European capital markets would be an unqualified benefit". Does the Minister also agree that long-term interest rates in Europe and in the United States are now virtually the same?

Lord McIntosh of Haringey

My Lords, I was not familiar with the comment made by Sir Eddie George to the House of Lords Select Committee. It sounds sensible, but I should need to read it in context to know whether it could possibly be supported as government policy.