§ Mr. Gouldasked the Chancellor of the Exchequer what effect the increase in unit labour costs of over 30 per cent. in 1975 has had on the United Kingdom's exchange rate for the £ sterling. and the United Kingdom's export prices for manufacturers; and when that effect was felt.
§ Mr. Denzil DaviesIt is not possible to give a precise estimate of the effect on the exchange rate of a high rate of wage inflation. This depends upon a number of other factors. The effect of an increase in unit wage costs on the unit value index for exports depends in part on the consequences for the exchange rate. On the artificial assumption that relative export prices in dollar terms remain unchanged between the United Kingdom and competitor countries, the effect of a rise in unit wage costs on the sterling unit value index for exports of360W manufactures will be roughly proportional in the long run. It is particularly difficult to make an estimate of the timing of such an effect.
§ Mr. Gouldasked the Chancellor of the Exchequer what has been the percentage increase (a) in annual unit labour costs since 1971 and (b) in the annual amount by which the sterling has been devalued since 1972.
§ Mr. Robert SheldonI will let my hon. Friend have a reply as soon as possible.