§ Mr. Gouldasked the Chancellor of the Exchequer (1) what increase in exports and imports of manufactured goods he now expects in the second half of 1976 and in each half of 1977 as a result of the devaluation of the £ sterling, assuming that the current rate is maintained subject only to compensations for Great Britain's higher inflation rate;
(2) what change he has been able to make in his forecast of visible exports and imports in the final quarter of 1976 and for each quarter of 1977 as a result of the devaluation of the £ sterling to $1.62; and what further changes he would make if the rate fell to $1.50.
§ Mr. Denzil DaviesThere is great uncertainty about the scale and timing of the effects of exchange rate changes, but by the second half of 1977 I would expect there to be a material benefit to the trade balance as a result of the depreciation in 1976.
§ Mr. Gouldasked the Chancellor of the Exchequer what estimate he has made of the relative effect on the rate of increase of imports of manufactured goods over exports in favour of the former: (a) the increasing profitability of imports despite the devaluation of the £ sterling or (b) the sale in the United Kingdom of imported goods at less than the fair market value.
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§ Mr. Denzil DaviesNone. On (a), the devaluation of the £ sterling appears to have led, in general, to a reduction in the profitability of imports. On (b), claims of "dumping" have been substantiated for only a tiny proportion of total imports.
§ Mr. Gouldasked the Chancellor of the Exchequer whether he has an index showing the competitiveness of British manufacturing industry at home and overseas; and, if so, whether he will indicate how it is constructed, how accurate it has been and what the figures currently show.
§ Mr. Denzil DaviesYes. Measures of competitiveness include relative prices and relative profitability. An index of export price competitiveness is given in Table B23 of the October 1976 issue ofMonthly Review of External Trade Statistics (No. 13), a copy of which is in the Library of the House of Commons. Details of competitors' export prices, together with the weights used, are given in that table. Details of the construction of the index of prices of United Kingdom manufactured exports are given in an article on pages 95–104 of Economic Trends for April 1975.
§ Mr. Gouldasked the Chancellor of the Exchequer what was the percentage increase in export prices for manufactures for each year since 1963; and what was the increase in the wholesale prices for manufactures, excluding food, etc., over the same period.
§ Mr. Denzil DaviesThis information is published inMonthly Digest of Statistics for the months of August 1976 (Tables 143 and 175), January 1974 (Tables 139 and 171) and January 1969 (Table 171); these are available in the Library.