§ Mr. Gouldasked the Chancellor of the Exchequer what assumptions on competitiveness are fed into the Treasury model of the economy.
§ Mr. Robert SheldonThe Treasury model currently employs both relative labour costs and relative prices as indicators of United Kingdom competitiveness. Forecasts of the economy, making use of the Treasury model, take account of these and other dimensions of competitiveness. Assumptions about the levels of competitiveness can be fed into the Treasury model; alternatively competitiveness can be predicted using forecasts of costs and prices. Which of these options is taken depends on circumstances: for example, the Industry Act forecast published in October of last year assumed a constant effective exchange rate, and previous Industry Act forecasts assumed a constant level of competitiveness.