HC Deb 08 November 1982 vol 31 cc303-4
12. Mr. Woolmer

asked the Minister for Trade what assessment he has made of the effect of the value of the £ sterling on British exports and imports.

Mr. Peter Rees

The exchange rate is only one element in the competitiveness of British goods. As a country we need to continue the improvement in productivity and the reduction of pay settlements.

Mr. Woolmer

Does the Minister accept that in relation to our manufacturing industry the pound is grossly overvalued? Does he accept that the deficit in the non-oil sector of £2 billion in the first three-quarters of this year has been offset solely because of a £3 billion surplus on oil account? Does the Minister accept that manufacturing industry is suffering from an overvalued pound?

Mr. Rees

Certain sectors of manufacturing industry may be affected by the level of the pound, not against United States dollar, but against other currencies. However, I would not accept that all sectors are affected. Perhaps the outcome of the CBI's debate is evidence of that.

Mr. Haselhurst

Does my hon. and learned Friend accept that we would be better able to arrange a favourable exchange rate for the pound, from the trade point of view, if Britain were to join the EMS?

Mr. Rees

As my hon. Friend knows, we are members of the EMS, but not full members. We have always said that we would consider becoming full members at the appropriate moment, which has not yet arrived. Some of the advantages to which my hon. Friend has drawn attention will weigh heavily in any debates that we have on that matter.

Mr. Foster

Will the Minister confirm that British industry is now 37 per cent. less competitive than it was when the Government came to power? Is he aware that to restore that competitiveness through acting upon wages alone would require a wage freeze for the next five years? Does he agree, therefore, that some measures of trade management are now essential?

Mr. Rees

The competitiveness of British industry has declined by about 30 per cent. since the first quarter of 1979. I certainly do not accept that a wage freeze would be the way to attack that problem. However, the Government's policies have, one hopes, sharpened the efficiency and general performance of British manufacturing and service industry, as shown by the rather successful trade figures of the past three years.