The ERM Crisis: Triumph or Tragedy: Crisis reopens Tories' Maastricht wounds: Tebbit and Howe at loggerheads over 'jumping on the grave' of currency system

THE threatened collapse of the exchange rate mechanism reignited the highly damaging Tory conflict over Europe yesterday, with Lord Tebbit urging the Government to celebrate on its grave.

That brought an immediate denunciation from Lord Howe, s former Cabinet colleague was being 'recklessly irresponsible'.

He argued that the breakdown of the system added weight to calls for a European single currency; something that John Major has ruled out.

Lord Tebbit told BBC radio's World at One: 'The Government should say, 'We now realise that the critics of the Maastricht treaty have been right all along; that it is based upon a potential act of supreme folly, that of creating a single currency'.

'That concept is dead and should be interred, and should be buried, and we should jump on its grave at the conference which should be called now to establish a new treaty.'

Lord Tebbit said he did not expect the Prime Minister to do any of those things. 'That would be too much for him to take,' he said.

However, Lord Howe rejected Lord Tebbit's views, saying: 'I think it's very important not to be deluded by the kind of simplistic absolutism which has characterised his conduct of the debate in recent times.'

He said the greatest period of post- war stability had been achieved by the Bretton Woods agreement, under which a system of fixed but adjustable exchange rates had run from 1945 to 1971. The breakdown of that agreement was regularly cited by Margaret Thatcher as one of the reasons for keeping sterling out of the ERM until 1990.

However, Lord Howe said that the EC had been quite right to try to achieve a similar system, and to talk of 'dancing on the grave of the system is to be recklessly irresponsible, quite frankly'.

Having left the ERM last September, he added, no one was arguing that the British should rush back to the rescue. 'But for the system as a whole, I think that the objectives of a fixed but adjustable system are necessary for a single European market. It would probably be more and not less necessary in the end, I think, for a single currency because of the huge impact of currency movements across the exchanges.'

As for the mechanism's current problem, Lord Howe suggested that the Germans might temporarily withdraw, 'rather than everybody else being dragged down with it'.

The rejoicing was not confined to Lord Tebbit and other Maastricht opponents on the Tory benches of the Lords and Commons. Peter Shore, the former Labour Cabinet minister, said: 'Nothing could be more beneficial to the peoples of France, Spain, Denmark and the European Community than the break-up of the existing rigid ERM system and a fall in European interest and exchange rates . . .

'All those who consider that mass unemployment is the main threat to European stability and prosperity will rejoice if exchange and interest rates can be freed from the German- dominated ERM.'

Mr Shore, MP for Bethnal Green and Stepney, added: 'The break-up of the existing ERM would also expose the sheer nonsense of the Maastricht treaty and put a stop to its dangerous plan to establish an economic and monetary union.'

That view, shared by Lord Tebbit, underlined the political danger of the ERM collapse for the Prime Minister - with the opponents of Maastricht using the money market turmoil to reopen the dispute that Mr Major had thought resolved by last week's Commons vote of confidence.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
people
Life and Style
techApp to start sending headlines, TV clips and ads to your phone
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
Life and Style
tech
Arts and Entertainment
Daniel Radcliffe and Zoe Kazan in What If
filmReview: Actor swaps Harry Potter for Cary Grant in What If
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Systems Developer Technical Lead

£65000 - £70000 Per Annum: Clearwater People Solutions Ltd: Our client based i...

Energy Engineer

£25000 - £30000 Per Annum: The Green Recruitment Company: Job Title: Energy En...

Techincal Accountant-Insurance-Bank-£550/day

£475 - £550 per day + competitive: Orgtel: Senior Technical Accountant-Insuran...

Sales Representative, Leicester

£25-£30k Plus Car: Charter Selection: Major well established nationwide market...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment