§ 38. Mr. Nicholas Bakerasked the Secretary of State for Employment how his Department calculates the effect upon employment in the United Kingdom of a rise in interest rates or rising inflation.
§ Mr. Alan ClarkA rise in interest rates may be caused by a number of different factors, both domestic and in the world economy. Its effect on employment would depend on its exact cause and consequent effects throughout the economy. Employment effects will vary as other factors vary, and so will the method of analysis. A general estimate of the effect of a rise in interest rate is therefore impossible.
Similar considerations imply that it is not meaningful to consider the effects of inflation on employment without specifying the exact cause and assumptions about the behaviour of the rest of the economy.