§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer if he will publish a table showing(a) the fall in the nominal and real rates of exchange between pound sterling and the individual exchange rate mechanism currencies, the dollar and the yen between August 1973 and February 1987 and (b) the corresponding change in the terms of trade for finished manufactures in trade between the United Kingdom, EEC and non-EEC countries, respectively; and what assessment has been made of the effect on output and unemployment between 1986 and 1988.
§ Mr. NelsonMonthly and yearly average daily exchange rates between sterling and the US dollar, the yen and those countries that were members of the ERM during the period in question can be obtained from the CSO database and can also be found in chapter 13 of the CSO's publication "Financial Satistics". Reliable figures for bilateral real exchange rates over that period are not available but real effective exchange rate indexes covering the countries in question can be found in "International Financial Statistics" published by the International Monetary Fund. Prior to 1988, indices for terms of trade are available only on a whole world basis, but these can 421W also be accessed from the CSO database by the Library of the House. There are a large number of influences on output and unemployment at any one time and it is impossible properly to assess the effects of exchange rate changes in isolation.
§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what criteria he uses when deciding whether sterling is fully competitive; and if he will make a statement.
§ Mr. NelsonThe Government have no target for either the nominal or the real exchange rate. There are a number of ways of assessing competitiveness: for example, real exchange rates can be calculated using various price indices and there are also economic concepts such as fundamental equilibrium exchange rates and purchasing power parity exchange rates. The only way to secure competitiveness in the long term is for producers to maintain strict control over costs and to sustain a high quality of output.