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Lord McIntosh of Haringey: I would tend to turn my noble friend's intervention on its head. I think it is in the interests of large and small business to prepare for economic and monetary union. Of course there will be expenses, but firms will be doing it because they plan to benefit from it. The help we will be giving to them will be because we want to advance the time when businesses, large and small, can benefit from EMU.
Lord Stoddart of Swindon: I am sorry to interrupt my noble friend again. He says that all businesses will benefit from the euro and the single currency. However, he has already said that only 15 per cent. of trade is done overseas. That means that 85 per cent. of trade is done within this country; and it is done largely by small businesses. I should like my noble friend to reconsider what he said because this will put a great burden on many businesses and they will get no benefit from it.
Lord McIntosh of Haringey: I am sorry if my poor articulation misled my noble friend. Fifty per cent. of our exports of goods and services are to the 11 countries which are on course to be applicants to become members of EMU. When I said 15 per cent., I was echoing the noble Lord, Lord Tugendhat, who reminded us that that represents 15 per cent. of gross domestic product. I repeat to my noble friend that the benefits for our businesses in working effectively with these 11 countries, which do receive almost 50 per cent. of our exports, are very great. We want to help them to achieve that.
Lord Pearson of Rannoch: I am not quite sure from where the noble Lord gets his figures. I have here an extract from the United Kingdom Balance of Payments--the Pink Book--1997 edition, produced by the Office for National Statistics and published by the Stationery Office in August 1997. That gives the proportion of UK world exports--visibles plus invisibles--as more than 50 per cent. going outside the 14 other countries of the European Union. In amplification of the point made by the noble Lord, Lord Stoddart, it seems that other statistics, which are not contested, show that about 80 per cent. of our economic activity takes place within the United Kingdom and that 20 per cent. of our economic activity goes to export. Of that, about 9 per cent. goes to the European Union altogether, which is reflected in the figures I gave the noble Lord earlier; and 11 per cent. goes outside the European Union. Therefore, the 80 per cent. figure that the noble Lord, Lord Stoddart, mentioned, is the percentage of economic activity that takes place in the
Lord Peston: Before my noble friend feels obliged to answer that, perhaps I may say that that was about as blatant an example of a complete misunderstanding of economics and trade as I have ever heard. There can hardly be a firm in this country that does not directly or indirectly either use goods and services imported from abroad or which exports abroad. As the noble Lord was speaking, I was trying to think of an enterprise that had no connection directly or indirectly with foreign trade and I found it impossible to do so. Simply looking around your Lordships' House, where we do not think of ourselves as being engaged in foreign trade, we are wearing and doing things which have aspects connected with foreign trade. That is precisely what the noble Lord is saying. It is as good an example of the misuse and misunderstanding of statistics as I have ever heard in my life. I am now willing to have the asperity paragraph read out, if necessary.
Lord Pearson of Rannoch: I never said that those firms were insulated from the outside world. My own firm trades entirely overseas and in most of the major currencies. I merely said that 80 per cent. of our economic activity takes place within this country and only 20 per cent. of it goes outside, less than half of which--and this is where I disagree with the Minister--takes place with the European Union, if one adds visibles and invisibles together.
Baroness Nicholson of Winterbourne: At the risk of adding to the statistical confusion that has already been offered, I suggest that we should compare our own export trade with the need of other people for exports. We should recognise that most of our competitors need only to export between 10 per cent. and 12 per cent. of their products in order to keep up their quality of life. We, in common with Japan, have to export well over 20 per cent. Surely, it is a question of comparison with our competitors. We have to export considerably more and it is that which we are debating tonight.
Lord McIntosh of Haringey: We are more of a trading nation than almost any other country in the world. Of all that trade in the export of goods and services, well over 50 per cent. goes to the other 14 countries, as the noble Lord, Lord Pearson, has rightly quoted, and almost 50 per cent. goes to the 11 countries who are applicants for European monetary union.
I now turn to some of the interventions of Members of the Committee. I cannot deal with all of them. I want to say something first about the stability and growth pact which, as I said, as regards Amsterdam, clarifies and extends the procedures of Maastricht, but it does not carry with it any new legal obligations.
Perhaps I may make clear that some of the fears which have been raised about fines are exaggerated. There are no fines whatsoever on any countries which are not within EMU. We believe in keeping to convergence because it is in our interests to do so and for no other reason. My noble friend Lord Grenfell has reminded us that fines are not automatic. That has been made very clear. I remind the Committee that fines would require unanimity in Council in order for them to be imposed. It is the members of EMU who submit stability programmes and it is others, including ourselves, who will submit convergence programmes because, as I have said, it is in our interests to do so.
Lord Shore of Stepney: I am worried about the noble Lord's statement that no additional legal obligation has been placed on us by the two regulations which were issued in July 1997 at Amsterdam in relation to the stability pact. My understanding was that if those regulations are flouted or disobeyed, that can be taken up with the European Court of Justice, whereas what was in the Maastricht Treaty, while being pretty nasty, was simply declaratory.
Lord McIntosh of Haringey: I am confident that I am right on this. I shall respond when I reply to the noble Lord, Lord Pearson of Rannoch. If I have left anything out I shall certainly write to my noble friend.
What is proposed here, very largely, is what is called multilateral surveillance, which is not binding on member states. The noble Lord, Lord Taverne, said that the Government will have left an enormous area of uncertainty. I hope that my re-statement of our policy will leave him clearer than he appears to have been before. Of course, it would be wonderful if I could respond to the noble Lord, Lord Mackay, by saying what exchange rates and interest rates are going to be in four to five years' time. If I could do that I would join Mr. George Soros rather than survive on a ministerial salary in this House.
The noble Lord, Lord Pearson of Rannoch, in a wonderful speech, weaves a complex but entirely illusory argument that the United Kingdom does not have an effective EMU opt-out. First, as he himself recited, Article B of the Treaty on European Union says clearly that the objectives of the EU, including EMU, shall be achieved in accordance with the provisions of the treaty. That includes the United Kingdom's clear and explicit opt-out contained in Protocol 25 in the new numbering of the treaty. Secondly, the United Kingdom is indeed party to Articles 98 and 99, which require, for example, that they shall treat their economies as a matter of common concern. But the treaty also sets out very clearly the way in which effect is given to that notion, for example, by the broad economic guidelines procedure in Article 99. That makes it clear that, although the Council can make recommendations to a member state, its recommendations are not binding.
Of course, it is possible to fantasise that the European Court of Justice will fall on a few words taken out of context from the treaty and conclude from them that the explicit UK opt-out from economic and monetary union is not valid. But no one who knows anything of the
I was going to reply to the noble Lord, Lord Ashbourne, about what he called "the pensions bombshell", but the noble Lord, Lord Taverne, has done that for me. Article 104B is absolutely clear. Whether we join or not there is no bail-out. There is no provision that would require any member state to bail out any other member state for any shortfall in its debt recovery as a result of its pensions policy. There will, of course, be very valuable pressure on other countries to control their pension deficit and that must be to the benefit of all of us.
In view of the time I shall write to other noble Lords who asked me specific questions. Therefore I end by echoing what was said by the noble Lord, Lord Tugendhat. Economic and monetary union is going to go ahead. We shall be affected by it whether we join or not. It is not the case that we can be entirely independent of it out of EMU or in it. This Government want the single currency to succeed. If the economic case is clear and unambiguous we want Britain to be part of that success. In the meantime we are working together with British business so that we are ready for the launch of EMU on 1st January 1999.
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