§ Mr. Gouldasked the Chancellor of the Exchequer what improvement in the trade balance of manufacturers would result from a 1 per cent. devaluation, calculating on the basis of trade in December 1976 at an annual rate; and how many United Kingdom jobs this would represent at the curent rate of value added.
§ Mr. Robert SheldonEstimates of the effects of exchange rate changes on trade and employment incorporate long lags and are subject to wide margins of error. On the assumption that earnings are not changed by the higher domestic price level a depreciation of 1 per cent. would lead in the long run to an improvement in the balance of manufactures equal to about 1½ per cent. of GDP. The effect on total employment in the long run could be a rise of one-sixth of one per cent., of which half would be in manufacturing.