§ Mr. Gouldasked the Chancellor of the Exchequer what is his estimate of the point to which the value of sterling needs to fall sufficiently to establish a balance in the United Kingdom's current trading position, after taking into account the adverse effect of devaluation on the terms of trade; and how long it would take to produce its effect.
§ Mr. Robert SheldonEconometric evidence suggests that there are long lags between changes in the value of the currency and the full effects on flows of trade, so that the existence of a trade imbalance in any particular month or quarter does not necessarily imply a need for a change in the value of the currency. Moreover, the net trading position depends not just on the value of the currency but on a variety of other factors, including relative prices and costs and relative pressures of demand between our own economy and those of our competitors, and the world terms of trade between manufactures and primary products.