§ Mr. Austin Mitchellasked the Chancellor of the Exchequer whether he will publish in the Official Report a table showing the percentage increase in the various measures of the real exchange rate since (a) the 12 months ended June 1974 and (b) the fourth quarter of 1976; and if he will make a statement showing which he regards as the most reliable measure of the United Kingdom's competitiveness and his reasons therefore.
§ Mr. ParkinsonI have been asked to reply.
There is no ideal way of measuring movements in the real exchange rate or competitiveness. The following table shows, for manufactured goods, changes in various measures from (a) the 12 months ended June 1974 and (b) the fourth quarter of 1976 to the fourth quarter of 1980. A rise in these measures indicates a fall in competitiveness except in the case of the profitability of exports, where the reverse is the case. The measures are defined in the notes to table F3 in the monthly review of external trade statistics. A discussion of the measures can be found in the Treasury and Civil Service Committee minutes of evidence on monetary policy, 14 July 1980, pp. 122–24. Both of these sources are available in the Library.