The former Chief Secretary to the Treasury, who said that he had backed ERM entry in 1985 when Margaret Thatcher ruled it out, said Mr Lamont had no alternative but to adopt the targets he was choosing.
They could provide credibility for now, but in the long run, he told a Bow Group meeting, 'it is not going to be possible to achieve the kind of stability that we have sought, except in some link with something like the ERM, even if a modified one'.
The Government had found in the 1980s that it could not use a single target such as sterling M3 to fight inflation, and had moved to a range of targets. The trouble was, he said, that 'however committed you are' there was a high element of discretion in interpreting such targets. They did not have the credibility of the ERM.
Sir Leon repeated his proposal for a half-way house where Britain could join within wider bands and would be able to suspend membership for 30 days in circumstances such as the French referendum. That would allow a judgement on whether the currency was under speculative pressure or did need realignment.
'It would be a discipline, but a less total and constraining discipline, a half-way house towards a return to the ERM that will ultimately be necessary.'
Such a bridge could not be adopted today, 'perhaps not even in six months' but when circumstances were right. The idea that departure from the ERM represented 'liberation' or was good news, was 'absolute nonsense'. Britain would not be free to ignore Bundesbank monetary policy, and those worried about the Bundesbank needed a central bank to determine monetary policy for Europe as whole.
Britain had to ratify Maastricht, he said, because it could not in the last analysis stop others moving to a single currency, but it could rule itself out of negotiations about EC economic and monetary policy. A vote for Maastricht would keep Britain's options open. A vote against 'is a vote to slide Britain into the relegation zone at the bottom of Europe's league'.Reuse content