§ Mr. Deakinsasked the Chancellor of the Exchequer if he will estimate the effect of a fall in the real level of United Kingdom wages on domestic demand.
§ Mr. Peter ReesThe size of the effect of a fall in real wages on domestic demand will depend on a number of factors, including the macroeconomic policy stance. The evidence suggests that domestic demand will increase, after the first year, in percentage terms by between 0.1 per cent. and 0.5 per cent. for every 1 per cent. sustained fall in the average level of real wages brought about by a fall in nominal wages.