asked the Chancellor of the Exchequer what has been the average price increase of imports and exports, respectively, since devaluation; and by how much per annum he estimates this will increase the adverse balance of payments.

The unit value of imports increased (in sterling terms) by 11 per cent. between October, 1967 and April, 1968, and the unit value of exports increased by 5 per cent. The change in our terms of trade has inevitably had a short-term adverse effect on the balance of payments. But the fall in the price of United Kingdom products relative to foreign products will, over the longer term, encourage import substitution and lead to a large increase in the volume of our exports. As the House knows, it was a principal object of devaluation to make United Kingdom goods more competitive in this way.