§ Mr. CashTo ask the Chancellor of the Exchequer what plans he has to correct the trade deficit with EC partners; what is his current policy on the pound/ deutschmark exchange rate; if he will make it his policy to allow the rate to float; and what has been his policy on the exchange rate in the last three months.
§ Mr. NelsonThe balance of trade with European countries reflects a range of factors, including the effects of the recession in continental Europe. The key to United Kingdom producers' future success both as exporters and in competition with imports in domestic markets is their ability to keep costs down and quality high. The Government have facilitated this by getting inflation down to its lowest level for a generation.
I have no specific target for the pound/deutschmark exchange rate nor for the sterling exchange rate index. But the exchange rate and domestic indicators, including the growth of the money supply and the behaviour of asset prices, are taken into account in guiding monetary policy.