§ Mr. ShoreTo ask the Chancellor of the Exchequer what conditions for the entry of sterling into the ERM, other than the DM2.95 central rate and the 6 per cent. margins, were sought by Her Majesty's Government and agreed to by the other European Community countries.
§ Mr. Major[holding answer 19 October 1990]: The central rates and fluctuation margins, which we proposed in exercising our right to take sterling into the exchange rate mechanism, were determined by mutual agreement. No conditions for entry were sought or agreed to.
§ Mr. ShoreTo ask the Chancellor of the Exchequer now that the pound is in the ERM, what assistance, through the very short-term fund facility from the other central banks, is available to the Bank of England for the purpose of holding the rate within its agreed margins.
10W
§ Mr. Major[holding answer 19 October 1990]: The Bank of England has available very short-term credit facilities with the other participating central banks. These are automatically available and unlimited in amount for financing intervention at the compulsory intervention rates. They may also be made available by arrangement for intervention within the agreed margins.
§ Mr. ShoreTo ask the Chancellor of the Exchequer who were the analysts who calculated the pound's purchasing power parity at DM3.30, DM3.19 and DM2.95, respectively; and what publication of the International Monetary Fund suggested that industry would be competitive at the DM2.95 rate.
§ Mr. Major[holding answer 19 October 1990]: The analysts were Phillips and Drew, Goldman-Sachs and the London Business School. The International Monetary Fund publication was "International Financial Statistics".
§ Mr. Nicholas BrownTo ask the Chancellor of the Exchequer if he will list in theOfficial Report the inflation-adjusted real exchange rate for each quarter since the second quarter of 1979, using the definition that he was using when he referred to the average inflation-adjusted real rate of the past decade being DM2.95, Official Report, 15 October, column 931.
§ Mr. Maples[holding answer 19 October 1990]: The figures are shown in the table.
11W
Real deutschemark sterling exchange rate Rate 1979 Q2 2.36 Q3 2.57 Q4 2.48 1980 Q1 2.69 Q2 2.86 Q3 3.02 Q4 3.34 1981 Q1 3.59 Q2 3.55 Q3 3.37 Q4 3.21 1982 Q1 3.33 Q2 3.27 Q3 3.33 Q4 3.25 1983 Q1 2.90 Q2 3.04 Q3 3.15 Q4 3.14 1984 Q1 3.10 Q2 3.07 Q3 3.08 Q4 3.05 1985 Q1 3.01 Q2 3.25 Q3 3.30 Q4 3.15 1986 Q1 2.85 Q2 2.86 Q3 2.61 Q4 2.43 1987 Q1 2.41 Q2 2.56
Rate Q3 2.60 Q4 2.64 1988 Q1 2.69 Q2 2.85 Q3 2.91 Q4 2.96 1989 ' Q1 3.04 Q2 3.00 Q3 2.92 Q4 2.78 1990 Q1 2.71 Q2 2.77 Q3 2.96 Notes:
(i) Real exchange rate calculated using gdp deflators.
(ii) Deflators used for most recent observations are partly estimated.