Vol. 471 No. 1
53 Mr. E. Byrne asked the Minister for Finance if his attention has been drawn to the survey by economic consultants (details supplied) which predicts a sudden drop in the value of sterling against the Euro in the first three years of economic and monetary union; the contingency plans, if any, being formulated by his Department to assist Irish industry in the event of such an occurrence; and if he will make a statement on the matter. [16781/96]
74 Mr. Andrews asked the Minister for Finance if he will consider establishing a sterling stabilisation fund for Irish small and medium sized enterprises whose sterling dominated exports account for 30 per cent or more of their turnover; inward sterling payments for approved exporters, up to agreed limits, would be converted at a rate of one to one. [18707/96]
I propose to take Questions Nos. 53 and 74 together.
I am aware of the document referred to by Deputy Byrne, although I gather that it is in fact a study rather than a survey. I understand that it does not predict a sudden drop in the value of sterling against the euro in the first three years of economic and monetary union. It says, rather, that if the pattern of sterling behaviour against the deutschmark (DM) since 1979 were to be repeated, and the euro were to behave like the DM, then sterling could experience a sudden fall against the euro within two to three years of the commencement of stage 3 of economic and monetary union in 1999. It also says, however, that several factors could influence sterling's behaviour against the euro if the United Kingdom does not join economic and monetary union and that it is impossible to forecast these in advance.
The UK has not yet decided whether or not it will participate in economic and monetary union from the outset, and in any event I do not propose to comment on what the behaviour of sterling would be likely to be if it does not. I would however point out to the Deputy that the question of the relationship there is to be between the euro and the currencies of member states not participating in economic and monetary union from the outset is currently under discussion at EU level and is a matter of concern to all member states. Apart from the question of the new ERM, which the UK Government has indicated it does not propose to join, there is unanimity that all member states, whether in economic and monetary union or not, should pursue sound and stability-oriented economic and fiscal policies, and that increased multilateral surveillance is necessary for this objective to be met. Proposals for such increased surveillance are currently being examined, in the context inter alia of making more effective the obligation in Article 109m of the Treaty on European Union for member states to treat their exchange rate policy as a matter of common concern.
As regards Deputy Andrew's suggestion, I am, of course, aware of the concerns some sectors of industry have expressed in relation to the Irish pound-sterling exchange rate over the past 18 months or so. However, it is primarily a matter for Irish exporters themselves, as it is for exporters in other countries, to cope with the economic environment in which they find themselves. This includes coping with the currency fluctuations. I have no plans to provide special assistance, whether by way of the establishment of a sterling stabilisation fund or otherwise, for Irish small and medium sized enterprises in the circumstances described by the Deputy. I would of course point out that the value of sterling has recently risen and is at present close to parity against the Irish pound.
