Below is the text of Mr Major’s comments on the Social Chapter and the ERM, made in London on 26th May 1993.
[The Prime Minister was asked if it was the situation that he disliked the ERM, the Social Chapter and wanted a Europe a la Carte?]
No it is not, but neither are we in favour of a prescribed Europe a la Carte, prescribed from the centre. Can I take those three issues separately. Why do I oppose the social chapter? It sounds very friendly, does it not, the social chapter? If you called it what it really is – an employment destruction chapter – I do not think it would have the same support across Europe and yet that is what I believe the social chapter to be. There is a second reason. Europe does not just compete within its own boundaries, Europe as a whole has to compete with Japan, with the United States and with the Pacific Basic countries, that is very tough competition. If we pile extra costs on our employers so that we pile extra costs on their products so that they can make a profit, we will make Europe uncompetitive. If we make Europe uncompetitive we will damage the whole of Europe – that is my argument against the social chapter, it is damaging in a highly competitive world to the competitiveness of Europe and that damage will cost us jobs. we have in the European Community nearly 13 million European adult citizens without work, that is far too many, it is not sensible to add to that by imposing at this moment fresh costs on employers that will cost us jobs. That is why I oppose it, I think it is wrong.
On the Exchange Rate Mechanism, I entered the Exchange Rate Mechanism because I have a passionate dislike of inflation, inflation wrecks jobs, wrecks countries, wrecks lives, I loathe it. We left the Exchange Rate Mechanism through force majeure, it was not a matter of choice, the market overwhelmed us and we left. It might have overwhelmed the Franc if it had been a reserve currency with as many non-resident holders of the Franc as there are non-resident holders of sterling, all able to sell in a market panic. The Franc thankfully did not face that problem and I am pleased about that, but we did and we had to leave. To say that there are no difficulties with the Exchange Rate Mechanism is really to fly in the face of logic, it seems to me. Sterling was tossed out of it, in Spain, in Portugal, in Italy there have been very real problems. One of the problems was that the Exchange Rate Mechanism, which was a flexible instrument, became a very rigid instrument as countries moved towards a single currency, it was too rigid and it broke in our hands and I think we have to look at the way in which it works before I could take sterling back into the Mechanism.