§ Mr. Strawasked the Chancellor of the Exchequer what use is made and has been made since 1979 within the Treasury's econometric model of the United Kingdom economy of (a) relative actual unit labour costs and (b) relative normalised unit labour costs in the determination of trade patterns and flows.
§ Mr. Brittan[pursuant to his reply, 21 December 1982]: The equation for exports of manufactures volume on the Treasury model includes relative normalised unit labour costs as an explanatory variable. Normalised labour cost competitiveness also appears in the equation for non-manufactures exports volume and in some of the manufactures imports volume equations. As explained in my reply of 15 December—[Vol. 34, c. 134]—the recent behaviour of productivity throws doubt on the measure of trend productivity used in the IMF's index of relative normalised unit labour costs in the last year or two. Allowance is made for this in assessing equation performance and in preparing forecasts.