Penalties could only affect us if we joined the single currency, then ran up an excessive deficit, and then failed to take any effective steps to reduce that deficit. Our position is absolutely safeguarded. On the substance of the proposal, we believe that deposits and fines will be useful deterrents against any member of EMU stage three who maintains irresponsible fiscal policies which risk driving up interest rates and weakening the currency for every other member. Under the Treaty, the penalties will not necessarily be automatic. We are arguing strongly that the process should be flexible and the size of the penalties should be realistic.
Most member states support our view.
If their budgetary plans pointed towards an excessive deficit, the Council of Ministers could make recommendations, which are by definition non-binding under Article 189. Again, it could only affect us if we chose to join EMU stage three. This is not yet drafted. This sentence has occasioned a groundless fear in some quarters that the UK's economic policy in the future could in some way be controlled, against our will, by recommendations made by the Council of Ministers. The only effect it could have would be to oblige a country to provide and share information about its economic policies and performance.