§ Mr. Gouldasked the Chancellor of the Exchequer how great a margin of competitive advantage is implied by the rise in the exchange rate since March.
§ Mr. MooreChanges in competitive advantage reflect many factors other than exchange rate movements, including important non-price factors such as design and reliability. The widely used measures of relative costs do not include such factors, and by their nature give equal weight to movements in the exchange rate, earnings and productivity.
63WThis means that short-term movements in these measures, which tend to be dominated by exchange rate changes, may often prove a misleading indicator of the longer term trend in the underlying level of competitiveness. This trend is likely to be influenced most of all by improvements in productivity, both as a factor directly affecting relative costs, and because it is often associated with improvements in aspects of non-price competitiveness.