§ 15. Mr. Dubsasked the Chancellor of the Exchequer what is his assessment of the effect of the recent fall in the pound sterling exchange rate on employment and inflation.
§ Mr. LawsonThe Government have taken firm action to keep inflation under control. This will help the growth of employment, though moderation of wage settlements remains vital if new jobs are to be generated on the scale that we should all like to see.
§ Mr. DubsIs not the truth that, despite the Chancellor's assertions, the link between a low rate of inflation and any improvement in the horrific level of unemployment is so tenuous as to be virtually nonexistent? Is not the truth that the Chancellor is setting his sights on the level of inflation and disregarding entirely the consequences for the level of employment and the exchange rate?
§ Mr. LawsonAs I have said more than once, the level of employment in Britain in the past year has risen steadily whereas in most of our major competitor countries in western Europe it has been falling. That shows the success of our policies at a difficult time. I readily concede that the hon. Gentleman and his right hon. and hon. Friends have no interest in bringing inflation down, as is seen whenever we have the misfortune to have them in office.
§ Mr. DorrellDoes my right hon. Friend agree that a fluctuating exchange rate is a serious disincentive to investment in export-orientated activity? Does he agree also that the cause of job creation would be well served by a Government policy designed to increase the stability of the exchange rate? Would it not be in our interests, in pursuit of that policy, to enter into negotiations with our Common Market colleagues to widen the scope of the European monetary system?
§ Mr. LawsonThe main turbulence in the foreign exchange markets recently, and for some time past, has been the exchange rate against the dollar. Joining the EMS would not make any difference to that.