§ John Healey
The Government's policy is that entering EMU on the basis of sustainable and durable convergence is essential so that the UK can benefit from the substantial increases in cross-border trade, investment, competition and productivity that EMU could provide. Sustainable and durable convergence between the UK and euro area must be demonstrated to have been achieved to ensure we and others could live comfortably with euro interest rates on a permanent basis.
As the Chancellor announced in his EMU statement on 9 June, the Government has put in place a reform agenda—right for the British economy, and the process of achieving sustainable and durable convergence and the flexibility necessary for Britain to succeed sustainably within the euro zone. The reforms include:step changes in the planning and supply of housing and in the market for long-term mortgages; anda fiscal stabilisation discussion paper considering the appropriate measures that could be taken to stabilise output volatility in the absence of domestic monetary policy were the UK to join EMU.
The fiscal stabilisation discussion paper considers the option of extending the regulator power to additional taxes such as stamp duty, and notes that it might be possible to use stamp duty to reduce volatility in the housing market and to affect personal consumption, but 892W that a potential drawback is that it may affect labour mobility. The paper did not estimate the change in the rate of stamp duty that would be necessary to do this, which would depend on the circumstances prevailing at the time.