Competitiveness (Hansard, 17 July 1986)

§ 11. Mr. Pike
asked the Chancellor of the Exchequer what assessment he has made of the change in competitiveness of British exports owing to changes in the sterling exchange rate over the past 10 years.

§ Mr. Ian Stewart
Experience has shown that competitiveness is determined by many factors other than the exchange rate. The excessive growth of our unit labour costs currently poses the greatest threat to our future competitiveness.

§ Mr. Pike
Is it not a fact that interest rates in this country are still too high, which, in exchange rate terms, is putting the pound at an artificially high level, and this is putting our exports and manufacturing industries at a disadvantage compared with our competitors abroad? In view of the Conservative Government's seven years of abysmal failure in reducing unemployment, when will they take some action to get the output of our manufacturing industries above the 1979 figure and manufacturing exports in surplus compared with our imports?

§ Mr. Ian Stewart
The hon. Member may not have observed that since the Budget interest rates in the country have already fallen by 2½ per cent. I would also remark that manufacturing output and investment have been rising well in recent years.

§ Mr. Philip Oppenheim
Is it not true that those countries that have the best record in manufacturing output are those that have had Governments who have followed consistently pro-enterprise, pro-business, pro-profit, lower taxation policies, unlike this country, which has been intermittently burdened by Left-wing Socialist Governments?

§ Mr. Stewart
My hon. Friend is absolutely right. Clearly the success of the British economy in the past few years has owed a great deal to the way in which this Government have been able to liberalise the economy and take off the shackles of the state and of excessive public expenditure. There is only one way in which that progress could be put at risk, and I hope that there is no chance of that. It would be if the Government were not given the chance to have not only one but many more terms ahead, so that years and generations of damage can be put right.