§ 11. Mr. Knoxasked the Secretary of State for Trade how many individuals, and how many bodies, have made representations to him about the effect of the exchange rate on trade.
§ The Under-Secretary of State for Trade (Mr. Reginald Eyre)About two dozen representations have concentrated on the effect the exchange rate has on trade.
§ Mr. KnoxDoes my hon. Friend agree that the current unrealistically high level of the exchange rate is pricing some British manufacturers out of export markets? Does he not think that the Government should do something to bring about a decrease in the exchange rate? 821 Does he agree that if that does not happen there is a danger that the demand for import controls will become irresistible?
§ Mr. EyreI fully understand my hon. Friend's anxieties, but inflation remains the main threat to our economic success, and the strength of sterling has advantages in helping to contain inflation.
§ Mr. Anthony GrantI appreciate the overriding need to contain inflation, but is my hon. Friend aware that the present exchange rate and interest rates are increasingly oppressing a great number of exporters? Will he and his Department, since they are responsible for exports, be urging the Treasury not to be dogmatic but to seek lower interest rates at the earliest possible moment?
§ Mr. EyreThe Government want interest rates to come down as soon as possible, but not if that means sabotaging our economic policy.
§ Mr. John FraserTo what extent is the high exchange rate due to the high level of interest rates? Do not the two high rates impose a double penalty? Is it not implicit in the Minister's reply that the only reason why he is not to act upon the exchange rate is that he has made such a mess of inflation?
§ Mr. EyreInterest rates have a bearing on the level of sterling, but to reduce interest rates before the money supply and the rate of inflation are properly under control would simply be a short-term palliative which would subsequently give a further boost to inflation?