European Monetary Union

Oral Answers to Questions — Foreign and Commonwealth Affairs – in the House of Commons at 2:15 pm on 5th July 1995.

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Photo of Iain Duncan Smith Iain Duncan Smith , Chingford 2:15 pm, 5th July 1995

To ask the Secretary of State for Foreign and Commonwealth Affairs what study his Department has made into the economics of EMU; and what assessment he has made of the strength of argument in favour of the formation of a single currency. [30895]

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

The economics of economic and monetary union are a matter on which my right hon. and learned Friend the Chancellor of the Exchequer advises the Cabinet. It is not possible to assess fully today the pros and cons of a single currency that might be introduced in 1999. I am encouraged by signs that elsewhere in Europe an increasingly hard-headed debate about the implications of a single currency is under way.

Photo of Iain Duncan Smith Iain Duncan Smith , Chingford

May I begin by offering my right hon. Friend my sincere best wishes for his future retirement and extend a warm welcome to the Back Benches? I know he will make a huge contribution from here as he has on the Front Bench. Furthermore, as there is such inconsistency about the economic rationale for going into a single currency, does he agree that this country should not endeavour to do so unless a massive, overwhelming economic rationale exists in favour of it?

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

The hon. Gentleman is trying to excite me.

I have always found my hon. Friend a most courteous and constructive critic and I am grateful to him for that. I cannot add very much to what the Prime Minister and the Chancellor of the Exchequer have said on this subject. The Prime Minister has shown over and again his wariness— that is the phrase that he rightly uses—[HON. MEMBERS: "Weariness"] No, W-A-R-I. My right hon. Friend has shown not only his wariness on the substance of this question, but his firm belief that Britain should be part of the preparation. That is why, over and again, he has made clear his view that we should retain the freedom that he gained for us at Maastricht. Of course, a single currency would be an important step. It would have important political and constitutional implications and we would have to weigh the economic arguments to which my hon. Friend refers. The whole point of the case from the Conservative Benches is that that weighing of the economic advantages and disadvantages cannot be done at this time.

Photo of David Winnick David Winnick , Walsall North

Should we not learn from the experience of what some people—certainly myself—would say was the nightmare of having been in the exchange rate mechanism, when conventional wisdom argued that we should go in and we saw what happened? Does the Foreign Secretary accept that there is a distinction to be made between the xenophobia that may be found among his own Back Benchers and those of us who believe, as he has just said, that a genuine constitutional issue is involved: a single currency would undoubtedly take away this country's right to determine interest rates and other issues, which should be in the competence of the Government and the House of Commons? There is bound, therefore, to be concern about the possibility of a single currency.

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

The hon. Member can address that point to his Front-Bench team. Of course, this is an important issue and it has political, constitutional and economic aspects. We do not believe that the pros and cons can be fully assessed in 1995.

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

Is my right hon. Friend aware that, when historians look back at his period of office in the Foreign and Commonwealth Office, and specifically Britain's position on economic and monetary union, they will see that during that time not only did we begin to tidy up what I suppose one might call the excesses of the Single European Act but the foundations were laid of a European Union of nations, in which Britain will feel comfortable, and at the centre of which it will find its place?

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

I am grateful to my right hon. Friend. His personal example has encouraged me to follow him into an active and eager life on the Back Benches. As he has raised this point, may I take the opportunity to thank and congratulate any of the present Foreign Office Ministers of State who may be promoted or moved during the afternoon.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

Nevertheless, the tone of the Foreign Secretary's reply suggests that he would agree that opposition to a single currency in a single market derives more from theology about sovereignty than economic common sense. Does he recognise that if the Government continue to pay too much attention to all these crazy Europhobes, sterling could well be left with about as much room for manoeuvre as the Luxembourg franc?

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

The hon. Gentleman misunderstands the position. Thanks to the Prime Minister's efforts at Maastricht, we are in a remarkably advantageous position. That is seen clearly—all too clearly perhaps—by our partners on the continent. We are able to take a full part in preparing this project without being committed to joining it. It is not often in life that we can have our cake and eat it, and the hon. Gentleman should rejoice.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

What is wrong with a single currency in a true single market?

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

I do not think that anything is wrong with a single currency in a true single market. I believe that a single market can exist without a single currency and it follows that the merits—the pros and cons—of a single currency need to be carefully weighed when and if the choice comes before us.

Photo of Robin Cook Robin Cook , Livingston

May I offer my good wishes to the Foreign Secretary for his retirement and the appreciation of the House that he is answering questions today in what appears to be overtime in his post?

As this will be the right hon. Gentleman's last opportunity at the Dispatch Box, may I tempt him to show the same robustness as he showed last week when he described the views on the single currency of the challenger to the Prime Minister as a "Right wing extremist agenda"? Was he at all surprised that well over a third of Conservative Back-Benchers voted for that right-wing extremist agenda? Did that fact confirm him in his good sense in opting for retirement rather than continuing to pretend that any Conservative can represent Britain in Europe when half his party wants to be rid of Europe and three quarters of Britain wants to be rid of his party?

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

I lost the hon. Gentleman in the last bit. I was trying to find a way of paying him a compliment as the third shadow Foreign Secretary with whom I have had the honour to match. They have all had their pluses and minuses, but I have found the hon. Gentleman courteous. Normal courtesies between us have been performed—and perhaps from time to time exceeded.

The extremist agenda turned out not to be quite so rigorous and extreme as I had expected, and I think that that is good. There was a thoroughly cool-tempered contest for the leadership of my party. I think that we all feel the better for it, particularly those of us who backed the winner.