§ Mr. Warrenasked the Secretary of State for Industry what has been the effect of the devaluation of sterling on the trade deal between Chrysler United Kingdom Limited and the Government of Iran which his Department has been studying.
Mr. Alan WilliamsThe contract which Chrysler United Kingdom has with the Iranian National Industrial Manufacturing Company is priced in sterling and has an escalation clause which permits price rises based on the United Kingdom mechanical engineering index. Adjustments to contract prices can be negotiated six-monthly although not retrospectively. The decline in value of the 341W pound increases the cost only of the imported content of the Iranian kits. These increased costs, which are in any event low because the import content is small, are, to a large extent, covered by the escalation clause. The net effect on the profitability of this contract of changes in the value of the pound is, therefore, very small.