Economic and Monetary Union (Hansard, 14 November 1996)

§ Mr. David Shaw
To ask the Chancellor of the Exchequer (1) if he will publish the proposed rules on excessive deficits in respect of EMU; and if he will make a statement on the methods for achieving and monitoring compliance with these rules; [3553]
(2) what proposals have been put to the Council of Ministers to include amendments to article 104(b) among those matters to which decision by a majority vote would apply; [3557]
(3) if he will publish the latest proposals for a stability pact in respect of EMU; and if he will make a statement on the methods for achieving and monitoring compliance with the terms of the pact. [3554]

§ Mr. Kenneth Clarke
Rules on excessive deficits in respect of EMU and the methods for achieving and monitoring compliance with them are set out in article 104c of the Maastricht treaty. A stability pact has been proposed to clarify the practical application of these provisions. I submitted an explanatory memorandum to Parliament on the Commission's proposals for a stability pact on 31 October. The purpose of the excessive deficits procedure and the stability pact is to ensure that member states participating in EMU do not follow irresponsible fiscal policies which could affect exchange rates and drive up interest rates for other member states. Under the UK's opt-out, paragraphs 1, 9, and 11 of article 104c would not apply to the UK if the UK were to decide not to participate in stage 3 of EMU.

§ Mr. Shaw
To ask the Chancellor of the Exchequer what powers will be available to(a) the European Monetary Institute and (b) a future European central bank to prevent the contravention of the no bail-out provisions of article 104(b) where such a bail-out is supported by (i) a majority of and (ii) all EU member states. [3555]

§ Mr. Clarke
Contraventions of any part of the treaty establishing the European Community, including the no bail-out clause—article 104b—are a matter for the European Court of Justice, not for the European Monetary Institute nor for a future European Central bank.
The excessive deficits procedure in article 104c, reinforced by the proposed stability pact, is designed to ensure that member states participating in EMU act in a fiscally responsible way and should help to prevent the issue of bail-out from arising.

§ Mr. Shaw
To ask the Chancellor of the Exchequer what provisions exist for the variation of the rules for excessive debt in respect of EMU(a) generally and (b) specifically in relation to unfunded pension liabilities. [3551]

§ Mr. Clarke
The rules on excessive debt in respect of EMU are set-out in article 104c of the Maastricht treaty. Paragraph 2 of that article makes clear how excessive debt shall be treated. Protocol (No.5) of this treaty explains how debt is defined and gives its reference value. This definition includes any debt incurred as a result of expenditure arising from pensions liabilities.