§ Mr. Gouldasked the Chancellor of the Exchequer how the actual volumes of United Kingdom imports and exports of manufactures in each of the years 1972 to 1976 compare with the volume which can be estimated by combining the Treasury formula on the effect of devaluation with (a) the new index for the effective exchange rate and (b) the old index.
§ Mr. Robert SheldonThe revision to the recorded value of the effective exchange rate does not entail any revision to measures of competitiveness for visible trade. The series for price competitiveness for exports of manufactures, which is published in the Monthly Review of External Trade Statistics, compares United Kingdom export prices converted into dollars with a weighted sum of competitors' export prices also expressed in dollars. The exchange rate used to put United Kingdom export prices on to a comparable basis with competitors' prices is, therefore, the dollar exchange rate. As the revised series for the effective exchange rate has not affected the series for competitiveness there are no changes on this count in the volume of exports and imports predicted by the Treasury model for the recent past. These predictions depend on many factors, such as world trade and domestic demand, and it is not possible to attribute past errors of prediction to one specific determinant such as competitiveness.