Mr Major’s Statement on the ERM – 30 July 1993

Below is the text of Mr Major’s statement on the ERM, made on 30th July 1993.

PRIME MINISTER:

The events of last week and the weekend vindicate our decision to suspend sterling’s membership of the ERM last September. As I said then, there are fault-lines in the system, which have now affected all the other currencies.

What we hope will emerge from the weekend’s changes will be conditions that will promote economic recovery in Europe. 60 per cent of our exports go to EC countries, so the opportunity for lower interest rates and a stimulus to economic growth is welcome.

It is not in the UK’s interests to see currency instability in Europe. So I understand the decision to widen the bands and stick to existing parities, rather than suspend the ERM itself.

The fault-lines in the system have clearly been exposed, and the Community will have to consider carefully in the longer term what the lessons and the implications are.

As the Chancellor has made clear, there is no prospect of the UK returning to the ERM in the near future, and we shall continue to set monetary policy by what’s right for the United Kingdom.

We have always made clear that we did not believe the time-table for EMU set in the Maastricht Treaty was right or practicable. As I said in a speech in the House of Commons on 9 June:

“In the negotiations at Maastricht I sought and secured an opt-out on the single currency because I was sceptical of its economic impact across Europe and its artificial deadlines … When I was negotiating at Maastricht, the idea of monetary union in 1997 looked ambitious, perhaps even a little dubious. I have to tell the House it looks wholly unrealistic today.”

I stand by every word of that. The EMU time-table looks totally unrealistic now.