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Monetary Policy

Volume 974: debated on Monday 26 November 1979

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asked the Chancellor of the Exchequer (1) why his monetary and exchange rate policies are directed wholly or mainly to restraining incomes in the industries exposed to foreign competition; whether he expects real wages in these industries to fall relative to those in other industries; and what means he plans to employ to enable the economy to expand after 1980 without strengthening the bargaining position of those whose interests are adversely affected;(2) whether his monetary policy is intended to bear more heavily on incomes in industries which compete with foreign goods and services at home and overseas; by how much he plans to reduce incomes in the industries concerned relative to the incomes of those engaged in the rest of the economy; and whether he expects capital and labour resources to stay in those industries if he is successful in reducing their incomes relative to those in other occupations.

The Government's monetary and fiscal policies are directed to reducing inflation. These policies will affect the whole economy. What happens to real wages in the various sectors of the economy depends on the level of pay settlements, movements in productivity and other factors outside the control of the Government.