§ Mr. PikeTo ask the Chancellor of the Exchequer what estimates he has regarding the effect of(a) a 1 per cent. rise in interest rates and (b) a 1 per cent. drop in interest rates on income to the Treasury.
§ Mr. Lilley[holding answer 21 October 1988]: Interest rates are set at the level necessary to maintain downward pressure on inflation. Lower inflation improves Government finances in the medium term.