§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer (1) what importance he attaches to the exchange rate in determining the competitiveness of United Kingdom manufacturers at home and overseas; and if he will publish his estimate of the amount by which unit costs of labour would have to fall in the import-competing and export industries to compensate for an increase of 5 per cent. in the nominal exchange rate;
(2) what importance the Government attach to the exchange rate in the management of the United Kingdom economy; and for what purposes the exchange rate is managed.
§ Mr. NelsonI refer the hon. Member to the answer I gave him on 21 March 1994,Official Report, column 15. The United Kingdom's price competitiveness depends fundamentally on improving productivity and controlling costs. Policies directed at permanently low inflation and competitive markets provide the best environment in which to achieve this. A policy of continued devaluation would only raise inflation and would be damaging to long-run economic success.
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§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer (1) to what extent the Government's monetary and exchange rate policies are designed to eliminate the deficit in the balance of payments on current account.
(2) to what extent the Government's monetary and exchange rate policies are designed to increase (a) employment and (b) output in manufacturing industry.
§ Mr. NelsonIt is the role of monetary policy to deliver low inflation. Decisions are based on an assessment of a range of monetary indicators and other data, in particular the growth of narrow and broad money and movements in the exchange rate and asset prices. Low inflation on permanent basis combined with sound public finances provide the stable and macro-economic framework needed for sustained growth in output and employment.
§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer (1) if he will publish a table based on table 7.1A of "CSO Financial Statistics, May 1994", showing the pound sterling exchange rate index against non-European monetary system currencies on a 1985 basis for each year since 1975, the fourth quarter of 1976, the second quarter of 1979, the first quarter of 1981 and each quarter since the fourth quarter of 1986, together with the corresponding figures for the pound sterling exchange rate index;
(2) whether it is the Government's policy to reverse the fall in the real exchange rate against the ecu between October 1990 and February 1993; and if he will publish a table showing the real exchange rate against the ecu and non-ecu currencies in the fourth quarter of 1976, October 1990, February 1987 and at the latest available date for countries for which figures are available measured in terms of (a) relative unit export values for manufactures and finished manufactures, (b) terms of trade for semi-finished manufactures, finished manufactures and manufactures, (c) relative producer prices and (d) relative average export values for manufactures and finished manufactures;
(3) if he will publish a table based on table 13.1 of CSO Financial Statistics, July 1988, showing the pound sterling exchange rate index against non-EMS currencies on a 1975 basis for each year since 1975, the fourth quarter of 1976, the second quarter of 1979, the first quarter of 1981 and each quarter since the fourth quarter of 1986 together with the corresponding figures for the pound sterling exchange rate index;
(4) if he will publish a table based on table 7.1 A of CSO Financial Statistics, May 1994, showing the pound sterling exchange rate index against European monetary system currencies on a 1985 basis for each year since 1975, the fourth quarter of 1976, the second quarter of 1979, the first quarter of 1981 and each quarter since the fourth quarter of 1986;
(5) if he will publish a table based on table 13.1 of Central Statistical Office financial statistics showing the sterling exchange rate index against European monetary system currencies on a 1975 basis for each year since 1975, the fourth quarter of 1976, the second quarter of 1979, the first quarter of 1981 and each quarter since the fourth quarter of 1986.
§ Mr. Nelson[holding answers 28, 29, 30 June 1994]: Single sterling exchange rate indices for EMS and non-EMS currencies are not available. I refer the hon. Member to the answer I gave him on 11 January 1994, 15W Official Report, column 19, where I gave a reference for the weighted composition and methodological construction of sterlin's exchange rate index.
The tables to which the hon. Member refers give figures for sterling's exchange rate index. Sterling real exchange rates defined in various ways can be found in "International Financial Statistics", published by the IMF, and in "Economic Trends", published by the CSO. Export and import unit values of manufactures and wholesale prices for the United Kingdom and its main trading partners can be found in "International Financial Statistics". Average export values of manufactures can be found in the "Monthly Bulletin of Statistics", published by the United Nations. The other data needed to calculate the information requested may be available from the national authorities of the countries concerned.
I refer the hon. Member to the answer I gave him on 21 March 1994, Official Report, column 15, where I made a statement about the role of the exchange rate in monetary policy.