European Union

Part of the debate – in the House of Commons at 6:47 pm on 11 December 1996.

Alert me about debates like this

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex 6:47, 11 December 1996

I have no time to give way.

Like my right hon. Friend the Member for Witney (Mr. Hurd), I have concerns about the single currency, but I feel strongly about the subject because I look back in history. I remember well that, twice at the beginning of my political life, under Macmillan, we made approaches to join the single market, some seven or eight years after it had been founded, and we were rejected by de Gaulle.

In consequence, by the time we joined in 1972, many of the rules had already been decided, including those of the common agricultural policy. We have been arguing and fighting against those rules that were decided before we joined, and paying for them ever since. That is precisely what we do not want to happen on this new, extremely important occasion.

My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) suggested that it would be good if some of us came forward with one or two positive ideas in the debate, apart from the grand scale of ideas. Yesterday, the Bank of England published a little book called, "Introduction of the Euro—What does it mean for business?" It was produced for the joint Confederation of British Industry and the British Chambers of Commerce workshops on EMU this month. I heartily recommend it to anyone who has not yet read it.

Given that there is likely to be a referendum on the subject at some point after the next general election, it would be sensible of the Treasury to ask the Bank of England to produce a booklet spelling out fairly the advantages and disadvantages of EMU, to be distributed to every household in the country before the next election. Only the Bank of England can do that, because it is not politically driven.

Our constituents need to know the facts. Of course, a large amount of hypothesis is still involved, because we do not know what will happen after 1999, but they should have an objective summary of the current situation produced by a respected body such as the Bank of England. I hope that my right hon. Friend the Chief Secretary, who is on the Front Bench at the moment, will take note of that and pursue the idea.

My right hon. Friend the Member for Guildford (Mr. Howell), for whose financial knowledge I have a great deal of respect, hinted that he did not think that we could join in the first wave. If we do not, there can be no certainty that we could join in the second wave after 2002. We cannot take that for granted, for the simple reason that, if we met the criteria, our application would have to be decided by qualified majority voting at ECOFIN, and there would have to be unanimity on the rate of conversion between sterling and the euro.

Despite the remarks of my right hon. Friend the Member for Kingston upon Thames, it is possible that, by that stage, the Korean and Japanese companies that are currently investing heavily in this country—the House should remember that, in recent months, Korean and Japanese investment in our manufacturing industry has run at a staggering $1 billion a month and in some months has reached £1 billion a month—might decide that, with us out of EMU but EMU working on the continent, they should put their new plant in Leipzig, Marseilles or Barcelona rather than here.

It would be perfectly understandable if some of the countries in EMU decided that it was going along very well without us and that that would be a real reason for trying to keep the British and other countries out, just as de Gaulle did in the 1960s. We cannot take for granted our ability to get in on the second wave.

That leads on to the question whether we can have a truly effective single market—we all agree that that is necessary—without a single currency throughout that single market. We are understandably pleased with the results of the devaluation of sterling a few years ago, just as the Italians are pleased with the results of the devaluation of the lira. It has had a huge improving effect on our trade figures. The converse of that is the chagrin of the French and Germans, who do not want it to happen again, because it had a bad effect on their trade figures. It is possible to argue that every member of a true single market must be within a single currency to stop competitive devaluations that fundamentally change the terms of trade.

One does not like to say it too publicly, but the unpleasant obverse of the coin is that, whatever the formal rules, members of EMU are likely in the long run to bend the practice and observation of the rules of the single market to the disadvantage of those members of the European Union that are not in EMU. That point was made by Sir lain Valiance, the chairman of British Telecom, in the recent publication of the Philip Morris Institute, "Is the Single Market working?" He said: Some form of supranational monetary discipline may be necessary to realise the full benefits of the single market.

I do not think that the European Union is at a critical stage. Progress on EMU and enlargement will be made in future, but it will be slow and tricky, and there will be quite a few changes of course. Sometimes, the only ones who seem to be in a crisis on the issue are us—the Members of Parliament at Westminster—aided and abetted by a generally anti-European press.

I noted the comments of the hon. Member for North Durham (Mr. Radice). I end by quoting the conclusion of an article that appeared in The Daily Telegraph today—a sometimes anti-European paper: At Maastricht, John Major gained an invaluable breathing space that enables us to take part in the formation of EMU without yet deciding whether we wish to join, a negotiating position that we painfully lacked with the CAP. What we must do is use that advantage to the full. We owe it to the electorate. It is pure chance that the author of that article is me.