HC Deb 25 February 1991 vol 186 c337W
Mr. Barry Field

To ask the Chancellor of the Exchequer, in sterling, how much Germany's contribution to(a) the United Kingdom, and (b) the allied coalition for the Gulf war has been reduced as a result of the increase in interest rates by the Bundesbank.

Mr. Mellor

It is not possible to distinguish the effect of the increase in interest rates by the Bundesbank from other factors affecting the sterling-deutschmark and dollar-deutschmark exchange rates and thus the sterling and dollar values of Germany's financial contributions.

Mr. Nicholas Brown

To ask the Chancellor of the Exchequer what is his estimate of the cost to business of each 1 per cent. increase in interest rates.

Mr. Maples

The calculation of such costs is inevitably fairly approximate. But a one percentage point rise in interest rates may directly increase industrial and commercial companies' gross costs by £ ½–¾ billion a year. A 1 per cent. rise in wages may increase costs by about £1¾ billion a year.

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