§ 15. Mr. Gouldasked the Chancellor of the Exchequer what criteria he uses to establish the price competitiveness of United Kingdom exports of manufactures.
§ Mr. Robert SheldonMeasures of competitiveness include relative prices and relative profitability and a method of calculating these was explained in the reply given to my hon. Friend's question on 15th November.
§ Mr. GouldDoes my right hon. Friend accept that the 9 per cent. revaluation of the pound against the dollar over the past three months, at a time when our export prices have been rising fast, has seriously damaged the competitiveness of our exports of manufactures, which are probably less competitive now than at any time since 1972?
§ Mr. SheldonMy hon. Friend's Question reflects some of the over-valuation of the exchange rate as it existed prior to last year. I do not think that anyone can seriously suggest that the present-level of the exchange rate does not provide a considerable competitive advantage for British industry. The latest figures suggest that it is taking advantage of it.
§ Mr. HooleyDoes my right hon. Friend accept that major factors in overseas markets are industrial capacity and reliability of delivery and that price competitiveness is not the only factor? Does he agree that industrial capacity will be hindered if we keep interest rates at their present level?
§ Mr. SheldonThese are all factors that have to be taken into account. The most important aspect is not necessarily the level of interest rates but the ability to invest profitably in particular areas where we can be sure of a long and continuing demand. Possibly that sort of confidence is the most important factor in terms of my hon. Friend's question.