§ Mr. Deakinsasked the Chancellor of the Exchequer what is his Department's estimate of the correlation between changes in the international competitiveness of the United Kingdom economy and changes in the pound sterling exchange rate.
§ Mr. Ian StewartThe relationship between international price and cost competitiveness and the nominal exchange rate is complex, difficult to quantify reliably, and in the shorter term often highly erratic. However a Treasury working paper "Her Majesty's Treasury Macroeconomic Model: Supplement to the 1982 Technical Manual" (a copy of which is in the House of Common's Library) describes a model simulation of the effects of hypothetical changes in sterling's exchange rate index on wage cost competitiveness, and may be of interest to the hon. Member.