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1995 - Mr Major’s Press Conference in Madrid

Below is the text of Mr Major’s press conference in Madrid, held on Saturday 16th December 1995.


PRIME MINISTER:

Let me just say a few words at the outset. Over the last few European summits, at Essen, Cannes, Majorca and now at Madrid, I think the European Union has taken a number of realistic steps. Immediately in front of us at the moment are some fairly historic challenges - enlargement, economic competitiveness, economic and monetary union and fundamental policy reform. In every one of those areas the Union has yet to work out clear and realistic policies and what I wish to see is practical answers to the real problems that lie in front of us. I think those practical answers are what will be the key to a successful Europe, a Europe that works, that isn't divided, that becomes a haven of prosperity and stability. And that is what I think people would wish to see from Europe. It is why, in my judgment, the European Union exists and it is where Britain's national interests lie.

I think at Madrid we have taken some further useful steps. On economic and monetary union, it is now increasingly understood, though I have to say it isn't universally acknowledged, that agreeing a reference scenario, as we have done over the last couple of days, isn't sufficient. There has to be a clear appreciation as well of where that timetable leads. And that of course is the merit of the study that we agreed today that should begin shortly under the Italian Presidency. And the purpose of that study is to look at the whole complex of issues that arise from a situation in which, at most, only a few member states are going to enter a single currency in 1999 or soon after. That outcome - a minority going ahead - is the only realistic scenario that you can paint on the present timetable. By 1999 only a minority, and perhaps only a very small minority, of countries will be economically ready to join a single currency.

And that decision - whether or not to join a single currency - will be one of the biggest decisions that Europe has yet had to take. We simply cannot tumble into it like lemmings over a cliff. We have to address the hard issues that arise from what has become known as the ins and outs question, and not only address those questions, we have to get them right, because the alternative will be chaos and recrimination over a very long period.

We need also a similar realism over enlargement of the Community. Here is another truly historic step for the Union. Britain has always been a fervent supporter of enlargement, I am sure it is right, it could and it should be the major step forward in extending Europe's prosperity and security for this generation and for future generations.

But there are some hard realities to confront. The plain truth is that if we enlarge at the next stage to a Union of some 20 or 25 members, we will bust the bank unless we have quite significant policy reform, reform of the Common Agricultural Policy and reform of the way in which we pay for the so-called structural and cohesion funds.

I don't believe it can be in anyone's interest to have the new applicants provoke a budgetary crisis by the simple act of joining the European Union. And the figures speak for themselves. In a Union of 20 members, the Common Agricultural Policy will cost tens of billions of Ecu, on top of the 36 billion Ecu the CAP costs already each year. As to the structural and cohesion funds, we calculate that if there is no reform, the extra cost of 10 new members could be some 38 billion Ecu per year on top of the 33 billion Ecu that we expect it to cost in 1999.

Simply to state those figures is to show how impossible it is for the European Union to begin to meet them, they are astronomical sums and they are sums which our citizens can't and won't accept, and I see no enthusiasm, looking around the membership of the European Union, to pay larger net sums into the European coffers. I have not formally called for volunteers to pay more, but I am sure if I did there would not be many forthcoming.

That policy reform is not an obstacle to enlargement, on the contrary it is necessary to make enlargement both possible and affordable. And we have to start work on this as soon as possible and I am delighted that we have agreed to take the first steps in that direction.

We have also made some useful progress in other areas important to us: employment policy, competitiveness, deregulation, subsidiarity, a very good discussion on that last evening over dinner, and so on. We have agreed the procedures for launching next year's Intergovernmental Conference and I was very pleased that without any dissent, and with some enthusiasm, our partners agreed my joint initiative with Jacques Chirac to fight drug trafficking in the Caribbean.

Let me just say a further word about the opening theme. The European Union needs to be very careful to make sure it doesn't become divorced from its citizens because its ambitions and its language become too remote from ordinary people. We have to learn the lesson of the Maastricht Treaty where in my judgment we went too far, too fast, for public opinion and I don't just mean in the United Kingdom, I mean in most of the countries of the European Union as well.

We are faced with a series of interlocking challenges over the next few years and we will need to get the balance right in the Union. I don't believe we will do so without facing down some of the pretensions which have from time to time infected European policy. What I wish to see in Europe is a rolling tide of realism about policy and I think much of our work this weekend has helped to achieve that.


QUESTIONS AND ANSWERS

QUESTION (Don MacIntyre):

Prime Minister, you have indicated 3 times that you are not intending to rule out British membership of EMU during the next parliament, can I ask you about a referendum and whether it is conceivable that your government would enter EMU without a referendum; and secondly, since you have canvassed the possibility of a referendum before, would you expect, if one took place, that the Cabinet would act in it with a collective voice and take Cabinet responsibility?

PRIME MINISTER:

I have never ruled out the possibility of a referendum, I have always said that is a possibility. If and when policy changes I will let you know, Don.

QUESTION (James Cox, BBC World this Weekend):

Do you privately believe, or perhaps hope, that the single currency won't happen?

PRIME MINISTER:

It is not a question of private beliefs and hopes, neither is it a question of the timetable. The question is whether it will work and whether it is right, and at the moment we simply don't have the information to make a proper judgment on that. I am in favour of the European Union, I have been in favour of the European Union since we first applied to join it, I have never changed my mind about that. I think Britain's place is in Europe and I think we are better off in Europe and Europe is better off with us than without.

But that doesn't mean I agree with each and every aspect of European policy, and it certainly doesn't mean that I look at European policy uncritically. And the concern that I have had about economic and monetary union is that the impact of economic and monetary union, not just on the members who go into it but on the whole of the European Union just simply has not yet been properly thought through. We have just come from a meeting with the 10 or 11 applicant countries. None of those is going to be in economic and monetary union, not now, not when they join the Community, not for a long time afterwards. What does economic and monetary union mean for their membership of the European Union? What does it actually mean for the existing structure of the European Union? What does it mean for the division between an inner core and a further ring of people who aren't members? What does it mean for trying to ensure that we get economic convergence, which we have sought for the last 20 years?

People don't yet know the answers to that. Now on many of those answers I am sure the technical questions can be satisfactorily resolved, but they are not resolved yet, indeed they are not even addressed yet. And I think before you can make a balanced judgment on what will be the most important European decision we will be called on to make for very many years to come, we need to know the answers to those questions. And I am not going to commit the government either way until we have examined those questions, until I know what the answers to those questions are.

QUESTION (George Brook, The Times):

Yesterday the Chancellor of the Exchequer gave us his opinion that it was 60/40 likely that in 1999 monetary union would start, what is your assessment of the odds?

PRIME MINISTER

I have no idea, I am not a bookmaker, the Chancellor knows more about these things than I do. But a minority may go ahead, we have said that before, we have said a minority may go ahead. I will offer you very long odds, much longer than 60/40 either for or against, very long odds against, that a majority of the European Union are not ready in 1999 and I doubt there will be any takers amongst my fellow Heads of Government for that proposition.

QUESTION (Tony Bevans):

How do you view the prospect of a Commission campaign to sell the idea of a European currency to the British public next year?

PRIME MINISTER:

That is a matter for the Commission. I doubt that a Commission campaign is going to make a great deal of impact frankly either in the United Kingdom or elsewhere, and neither do I think the choice of name would particularly help a campaign here or elsewhere.

QUESTION (Reuters):

You have talked about the problem between the ins and the outs, but isn't there a risk of Britain being even further out because you have ruled out any entry into an exchange rate mechanism before going in?

PRIME MINISTER:

And a very sensible proposition indeed. An exchange rate mechanism was used as a means to an end, it isn't the end. We have seen it as a means to an end and it wasn't successful. We have seen it wasn't successful not just for the United Kingdom, but right across Europe we saw it wasn't successful and we are not going back in it.

QUESTION: (Elinor Goodman, CH4 TV):

You have made a lot throughout this meeting of the need to address the problems of the "ins and outs" but as I understand it the final communique will make a fairly brief reference to that study. Are you convinced that you have actually convinced your colleagues that there are real problems?

PRIME MINISTER:

Sure! I don't think there is a shadow of doubt about it and if I can remind you, Elinor, before I raised this question at Majorca no-one had heard of "ins and outs", it wasn't even considered, nobody raised the subject, nobody bothered to give a moment’s thought to what happened to the countries that chose not to join or weren't able to join. Now it has been a central part of the debate. It is going to be examined in the Italian Presidency, you doubtless saw what Prime Minister Dini said in his own Parliament not after his meeting with me in Italy last week but before his meeting with me in Italy last week and it has been raised by a number of other Heads of Government as well.

There is no doubt there are real problems there and they are a matter of concern not just to me - though they are a matter of concern to me - but to a lot of other countries as well and we will have a full and complete discussion of those problems and a determination of them, I hope, before anybody is unwise enough to take precipitate decisions.

QUESTION: (Elinor Goodman):

On that point, are you satisfied that if the inquiry can't come up with satisfactory answers, you could actually stop a hard core going ahead?

PRIME MINISTER:

We can’t stop other countries doing things if they choose to do them. If other countries choose to do something that is economically foolish, then it is extremely difficult to stop them. What we can do and what we are doing is bring to people’s attention what the implications of what they are seeking to do are for them and for others. Of course, if some of these don’t meet the Maastricht criteria, then there is a wider opportunity to express a view as to whether they should go into a single currency but if a small number of countries meet the Maastricht criteria, they are sovereign nations just like the United Kingdom and they can make their decision to go in if they wish and we can make our sovereign decision to go in or not go in as we wish.

QUESTION (John Palmer):

Prime Minister, I have got a bit of a problem understanding the basis on which you say with such confidence that only a tiny minority will go ahead to the third phase of economic and monetary union. In the last hour, I have heard the Austrian Chancellor, the Swedish Prime Minister, the Finnish prime Minister and indeed the Irish Taoiseach all say with perfect confidence that they are going to join and among the candidate countries you met today the Cypriots and Maltese claim - perhaps they are deluding themselves - they have already qualified and the Estonians will qualify in a month’s time according to the Maastricht criteria. It looks as though either they are all suffering from collective delusion or the numbers may be rather bigger than you think.

PRIME MINISTER:

No, the numbers are not higher than I think and you need to have a look at the Commission reports and you will see that, John. If you actually look at the details of the Maastricht criteria and consider the political debate as well, there is barely a government across Europe who will not for their own domestic reasons say: “Yes, of course we think we are going to meet the criteria!” and you know as well as I do, John, why that is. They say they are going to meet the criteria because the moment they say they are not going to the meet the criteria they lose the domestic political impetus to carry out the convergence policies because they are very painful and difficult in their own countries. You know that and I know that and so do they know that.

QUESTION (Robin Oakley, BBC):

Prime Minister, what serious hope do you see of CAP and Structural Funds reform, how do you think it might come about and aren’t you worried that this Council has sent a very negative message to the former Soviet bloc countries who want to become members of the European Union?

PRIME MINISTER:

No, I don’t think that is right about sending a negative message. We have just had lunch with them and the agreement is that for all of the applicant countries without exception the Commission will begin to frame an opinion, an examination of their economy and their capacity to join. We hope that is going to be completed round about the end of the IGC - May, June 1997 - and soon after that we would be able to see as a result of those opinions which are the nations most likely to be able to go ahead in the near future.

As far as the CAP is concerned, there clearly is an inter-relationship there but I think the realistic point is that unless there is reform of expenditure it would be extremely difficult to cope with the impact of large numbers of new members coming in so in the interests of getting them in we do need to have to enmesh the reform of the CAP and the Structural and Cohesion Funds, and agreement to put work in hand was reached over the last day or so.

QUESTION (Spanish Radio):

After what happened in the Balkans and knowing that you talked about this matter yesterday at dinner, don't you think that it is necessary for the European Union to have a common foreign affairs policy?

PRIME MINISTER:

Sure! We are very much in favour of a common foreign policy but it has to be a common foreign and defence policy by consensus. Foreign policy and defence policy are intrinsically sovereign matters for the nation state and it is not conceivable for British foreign or defence policy to be determined by a qualified majority vote in Brussels; that is not an option but where we can reach a common agreement it is very sensible to do so and we think there are ways in which we can improve the working of a common foreign and security policy and we will be producing options at the intergovernmental conference.

QUESTION (Boris Johnson):

Prime Minister, you said you would consider the idea of a referendum but one thing I can't quite work out is if there were to be such a referendum when it would happen. The Chancellor has said that we may have to decide by the beginning of 1998 whether or not we want to go into stage 3. Am I right in thinking that a referendum would have to take place therefore before the beginning of 1998?

PRIME MINISTER:

No. I think you are confusing two things. If there were to be a referendum, the time for a referendum would be after the British Cabinet had decided that it wished to recommend going in and it would then seek an endorsement of that in a referendum were there to be one but as you know, we have kept that open, no decision has yet been made on it.

QUESTION (Toby Helm):

There are many right-wingers in your party who were hoping that you would have been prepared to rule out British entry into a single currency during the lifetime of the next Parliament. You have now categorically said that you are not going to do that and there are some who are already showing signs of being rather restive back home. What message have you got for them this evening?

PRIME MINISTER:

I have explained why I don’t think it would be wise to rule out going into a single currency or many other policies during the period of the next Parliament, policies of that importance, and the reason is really very straightforward and it is a reason I think that all my colleagues will understand.

In the European debate, Britain is one of the big countries, we have an important voice in the European debate. I have no intention of letting that voice be stilled on the most important European issue, the most contentious European issue that lies immediately in front of us. If I had said a year ago: “We are not going into a single currency!” I would not over the last few weeks at Majorca and here have been able to win the argument for a proper consideration of what will happen if a minority go ahead on the “ins and outs” question. I would have had no voice, my colleagues would have said to me “But you said you are not going into it, it is nothing to do with you!”. That is no position for one of the great European countries to find itself in.

We are in a classically advantageous position. We can stay in the argument right up until the last moment but uniquely amongst our colleagues, we have a treaty right to say we are not going to enter a single currency if we don’t think it is in the British national interest to do so and the fact that I am not ruling it out now should not be mistaken. It is not an indication that we have made our minds that we are going to go ahead, by no means is it that and nobody should read it as that. We will make up our minds when the facts are in front of us - and they aren’t yet. The option of saying no is with us and we can exercise that if we choose to do so, if we believe it the right thing to do at any time in the next Parliament but it would in my judgement be folly for the United Kingdom, one of the big countries of Europe, to say at this stage we are going to exclude the British voice from a matter as important as this for Britain and for the rest of Europe because it isn’t just a matter for the countries that go in. If a small number go in, it is going to have an impact on those that don’t go in as well so our voice is going to be there and it is going to be heard and I have made that clear in the House of Commons and I am delighted to repeat it today.

QUESTION (Joe Murphy):

Prime Minister, some of your colleagues have mooted the possibility that the manifesto might contain a commitment to have some form of public consultation before joining EMU which might be a referendum or might be another general election. Would you rule out that possibility?

PRIME MINISTER:

We haven’t remotely got near a general election yet and if I can let you into a deep and dark secret, we haven’t yet prepared the manifesto. When we come to the manifesto, we will look at those options. I have indicated some things that won’t be in but we haven’t discussed it in detail yet.

QUESTION (Robert Peston):

Prime Minister, you have indicated recently your concern particularly for the countries outside - “the outs” - of the sort of currency turmoil that we might see unless certain questions are resolved. If, nonetheless, some of these questions aren’t resolved but a number of countries press on with monetary union, do you think that the people on the inside are going to be in a stronger position or the people on the outside?

PRIME MINISTER:

At this moment, who can tell? If they proceed with a currency union and it isn’t successful, there is absolutely no doubt about the chaos that will be caused inside the countries that took part in monetary union but that would ripple outside as well. The argument that I keep putting to my European colleagues and about which I feel extremely strongly is although they have a sovereign right to go in if they meet the Maastricht criteria and chose to do so, it would be extremely unwise of them and extremely unfair to the rest of Europe to contemplate doing so until we know what the implications would be for everyone. We don’t have that study yet. I have asked repeatedly for that study, I have argued for that study, we are now going to get it. When we have got it, we might be able to make a more measured judgement to your question because I agree it is an extremely important question and we should not proceed until we know the answer but we can’t give you a proper answer - other than a guess - until we have done the work that I have been asking for and that is now going to be [short section of the rest of the Prime Minister’s reply is missing].

QUESTION (Robert Peston):

Would you like to make that guess for me now, as it were?

PRIME MINISTER:

I have given it careful consideration, Robert, and no, I wouldn’t like to make that guess for you now.