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Volume 940: debated on Monday 28 November 1977

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asked the Secretary of State for Industry which industries are most likely to benefit and which to suffer as a result of the appreciation of the £ sterling.

Appreciation of the £ will tend initially to reduce price competitiveness or profitability for all industries for which international trade is significant in relation to output. The extent will depend upon the circumstances of the industry. To generalise, it is likely to be greater for industries producing bulk commodities and mass-produced goods, like bulk chemicals, man-made fibres and some textiles; and smaller for specialised products where factors like design and performance are more important, as in the mechanical and electrical engineering sectors. But the extent of such effects will vary widely from firm to firm according to the nature of their products, and the proportion of components and other inputs imported. To the extent that appreciation helps to bring about a lower rate of domestic inflation and so lessen the rate of increase of unit costs it will offset the initial loss of competitiveness.