§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what is his estimate of the saving to consumers of oil in each of the Organisation for Economic Co-operation and Development countries as a result of the fall in the price of oil to the present level, expressed at an annual rate; and how much of this saving is at the expense of overseas suppliers.
§ Mr. MacGregorIn each of the OECD countries savings to consumers of oil from lower crude oil prices will depend on the extent to which companies pass on the lower cost of oil, how Governments react, for example with regard to fuel taxes, and the extent to which oil consumption changes. It would be impracticable to attempt to estimate these effects.
§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what is his estimate of the balance of payments effect on the exchange rate for the pound sterling against the deutschmark, the dollar and the yen of the fall in the price of oil to the current level compared with the averages for 1985, all other things being equal.
§ Mr. Ian StewartThe precise relationship between changes in the oil price, the exchange rate, and the balance of payments is complex and any estimate of the effect of recent changes would be highly speculative.
§ Mr. Austin Mitchellasked the Chancellor of the Exchequer if he will publish in the Official Report a table showing such information as is available to him on the current account surplus/deficit for the United Kingdom, the United States, Germany and Japan for the latest available period of 12 months covering (a) visibles and invisibles, (b) visibles and (c) trade in manufactures, measured in terms of local currency; and if he will also include his estimate of the balance of payments gain or loss 383W which would accrue in each case if the price of oil remained at the present level and consumption remained unchanged.
§ Mr. MacGregorThe following figures are for 1985 except where otherwise indicated:
Visibles and invisibles Visibles Trade in manufactures* United Kingdom (£ billion) 3.3 -2.3 -2.9 United States of America ($ billion) -117.7 -124.3 †-56.2 Germany (DM billion 36.3 74.1 †56.0 Japan (Y trillion) 11.8 13.4 †8.4 * SITC categories 5, 6, 7 and 9. † Figures for twelve months to November 1985. Sources: OECD Monthly Statistics of Foreign Trade (February 1986); Monthly Review of External Trade Statistics, Department of Trade and Industry (February 1986), national sources for individual countries.
The balance of payments gain or loss from a fall in oil prices depends on how the change in oil price affects other prices, economic activity, exchange rates and so on. There is considerable uncertainty about the magnitude of these effects.
§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what is his estimate of the effect on wholesale and retail prices of the fall in the price of oil to the present level, all other things being equal; what effect the resultant increase in purchasing power is likely to have on the rate of inflation; if he will describe the effect that the increase in purchasing power will have on the rate of growth; and how this differs in its effect from other ways of reflating the economy.
§ Mr. MacGregorEstimates of the effects on inflation and purchasing power of the fall in oil prices are inevitably very uncertain. Treasury working paper No. 34 by S. Powell and G. Horton, "The Economic Effects of Lower Oil Prices", published a year ago, gave some estimates. Different results are shown in studies published by independent commentators.