§ 12. Mr. Tim Smithasked the Secretary of State for Prices and Consumer Protection if he will give an estimate of the effect of the depreciation of the £ sterling on a trade weighted basis, since the Budget, on the retail price index.
§ Mr. HattersleyRoughly speaking, each 1 per cent. fall in the exchange rate adds about ¼ per cent. to the retail price index, within about 12 months. The trade-weighted depreciation since the eve of the Budget has been 1.4 per cent.
§ Mr. SmithWas it not the Budget which caused the subsequent fall in sterling? Did the Government fail to understand that the public sector borrowing requirement forecast for this year would be totally unacceptable? At the time of the Budget, was this outcome anticipated, and has it been taken into account in the forecasts which the Secretary of State made yesterday?
§ Mr. HattersleyI am astonished by the effrontery of the hon. Gentleman, who tells us that the public sector borrowing requirement in the Budget was too high but nevertheless supports a party which voted to make it £500 million higher.