HM Treasury News Release
124/97 20 October 1997
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SPEECH BY THE CHANCELLOR GORDON BROWN AT THE LAUNCH OF THE
STOCK EXCHANGE ELECTRONIC ORDER BOOK
Attached is the official text of the Chancellor's speech
to the Stock Exchange this morning.
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SPEECH BY THE CHANCELLOR GORDON BROWN AT THE LAUNCH OF THE STOCK
EXCHANGE ELECTRONIC ORDER BOOK
Today's launch is the most significant development that London
markets have experienced since "Big Bang" 11 years ago.
"Big Bang" brought electronic share price information which enabled
telephones and computers to replace face-to-face trading. Today's
event is a further step, perhaps an even more significant step - a
fully-automated way of trading shares, first for FTSE
100 companies, but destined to expand.
It demonstrates the Stock Exchange's commitment to the continuing
technological evolution that is essential to maintaining London's
position as one of the world's top three equity markets.
Staying ahead in today's financial markets means constantly
harnessing and adapting the power of rapidly advancing technology.
And today's launch of the Stock Exchange's electronic order book is
about applying new technology.
But it is about something much more than that - it is about City
firms and institutions working together to remain competitive and
to help ensure that the UK economy remains competitive.
The City and the UK financial services industry require three other
crucial ingredients:
- first, a skilled workforce at the forefront of technical know
how, but also retaining the expertise amassed over many
generations and for which this country has become renowned -
in trading, investment management, banking, corporate finance,
the law, and accountancy;
- second, a robust transparent and accountable framework of
regulation that recognises the global reach of the modern
financial services industry;
- third, a stable macro economic backdrop against which the
UK financial services industry can plan and compete.
Every measure we have set in place since May is designed to enhance
the long term stability of the British economy so we can have
sustainable levels of growth.
First, our monetary framework which includes independent interest
rate decision-making powers for the Bank of England.
Second, our new fiscal framework at the centre of which is a five
year deficit reduction plan which allows us to meet the golden rule
in public finances.
Third, our plan to modernise the welfare state to create flexible
labour markets matched by investment in education and employment
opportunity.
Fourth, our European policy with our commitment to apply to
Monetary Union the five British tests - the impact on jobs,
investment and the City, ensuring flexibility and the convergence
of the business cycles - to ensure the long term interests of
Britain.
The Review I set up into Monetary Union will report conclusively to
Parliament on the five British economic tests and the following
issues:
- the formal communication to our European partners, under the
Treaty, about 1999;
- the Government's approach to the working of the stability pact
and the convergence criteria;
- the Government's position on the future of ECOFIN and economic
co-ordination in Europe;
- any action that the Government proposes on economic
convergence;
- the action the Government proposes on ensuring greater
flexibility in Europe to avoid any risks of potential shocks
if there is a Monetary Union and progress it proposes to make
the European economy more flexible and employment-friendly;
- the Government's determination not only to have a successful
Presidency and proper and orderly decisions about EMU under
the Treaty - the way in which the Government's business
advisory task force will help business and the City to prepare
in or out;
- the need for a period of stability.
The Government is determined not to fall into the old trap of
saying that we will join "When the time is right" and implying, in
so doing, we could join the next day or the next month, allowing
that possibility to dominate every waking hour and week of the
Government and then eventually being forced to make the decision
for short-term reasons - not, as it should be and should always be,
the long-term national economic interest.
I have said consistently that it is unlikely we will join the first
wave - we have to ask questions about our levels of preparation,
our flexibility and the economic cycle which has been out of line
with our European partners - and that there are formidable
obstacles throughout.
If we do not join in 1999, then Britain will need a period of
stability without continuing speculation while Britain endeavours
to meet the five economic tests.
At the heart of our policy will always be our determination to
pursue policies of low inflation and to control public borrowing.
In every decision therefore this Government rejects short-term
pressures and will not be diverted from the long-term national
economic interest.
So this is the very best environment for the City to succeed.
So, thank you again for inviting me to join you this morning.
My congratulations to the Stock Exchange for leading this exciting
development for the London Market.
The whole country's best wishes to the investment houses and
trading firms as they acclimatise to a new method of trading, one
which I am sure is going to bring huge benefits to the City, the
financial services sector and investors.
We all look forward to being back here at some point in the future
to mark the next stage of the City of London's continuing
development and success.
Thank you very much.