§ 10. Mr. David Taylor (North-West Leicestershire)If he will make a statement on the impact of his fiscal policy on the exchange rate of the pound in the last six months. [106891]
§ The Chief Secretary to the Treasury (Mr. Andrew Smith)The factors affecting the exchange rate are many and complex, so it is not possible to identify the precise impact of fiscal policy. However, as I have just said, the Government's fiscal policy has made an important contribution towards achieving long-term economic stability by locking in sound public finances.
§ Mr. TaylorThe Minister knows that sterling has risen to levels last seen in the mid-1980s. Does he share my concern that any fiscal loosening in the March Budget risks driving up the pound even further, accentuating the difficulties experienced by small firms in North-West Leicestershire that export to, or compete with, firms in 1202 Europe? What does he say to those who claim that it is safer to invest any fiscal elbow room in better public services rather than further income tax cuts?
§ Mr. SmithI am sure that my hon. Friend would not expect me to speculate on the contents of the Budget, any more than he would expect me to speculate on interest or exchange rates. Our message is clear: the programmes that we have put in place for stability, sound public finances, investment and higher skills levels are the best measures to help businesses, including small businesses, to succeed in the global economy.
The trends for manufacturing industry are encouraging, in the east midlands as elsewhere. Output is higher than ever; exports are rising and, as this month's CBI and British Chambers of Commerce surveys showed, confidence is increasing. It is as a consequence of those measures that in the east midlands employment has gone up and unemployment has gone down since the general election, with youth unemployment down by three quarters and long-term unemployment down by two thirds. That is the confidence that we have in the businesses of the east midlands, and which they are reciprocating through their record on jobs and exports.
§ Sir Michael Spicer (West Worcestershire)As the Minister has implied, when he is answering the right question, interest rates are one of the factors that affect exchange rates. Why has the Chancellor of the Exchequer, according to The Times today, in effect told what is meant to be an independent Monetary Policy Committee to increase interest rates?
§ Mr. SmithThat is not what my right hon. Friend told The Times. He told it that we backed the actions of the Monetary Policy Committee and the Bank of England in taking whatever steps are necessary to ensure that we stick to the path of stability, steady growth and sound public finances that is steadily transforming the economic prospects of this country.