HC Deb 07 March 1995 vol 256 cc102-3W
Mr. Austin Mitchell

To ask the Chancellor of the Exchequer if he will make it his policy that the Bank of England will not intervene in the foreign exchanges to prevent the pound sterling from falling against the deutschmark.

Mr. Nelson

The valuation of the pound is determined by transactions in the foreign exchange market. Movements in the exchange rate are considered as part of the general assessment of monetary conditions in setting monetary policy. The Government recognise the value of a stable exchange rate, but they do not set target rates. For good reasons of market management, the Government do not comment on intervention in foreign exchange markets.

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer what has been the effect of the Government's exchange rate policies on the rate of unemployment since 1975.

Mr. Nelson

Levels of unemployment are influenced by a wide range of factors and it is not possible to isolate the effects of any single factor. The Government's policies are designed to promote sustained economic growth, secure jobs and rising prosperity, through structural policies to improve the long-term performance of the economy and a stable macroeconomic environment.

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer why the nominal rate of exchange rose against the deutschmark between February 1993 and January 1994; what was the effect on the real exchange rate measured in terms of export unit values for manufactures; and what was the effect on the convergence criteria under Maastricht.

Mr. Nelson

The sterling-deutschmark exchange rate is determined by transactions in the foreign exchange markets. Data on the nominal exchange rate can be found in "Financial Statistics" published by the Central Statistical Office. Unit value export prices for the UK and Germany can be found in "International Financial Statistics" published monthly by the International Monetary Fund. Together, these data can be used to calculate the change in the real exchange rate with Germany between January 1993 and February 1994. It is impossible to quantify the effect on the change in the exchange rate on sterling export prices, and hence on to the real exchange rate. Movements in the sterling-deutschmark exchange rate over this period have no direct consequences for the Maastricht convergence criteria.