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Sterling Exchange Rate

Volume 33: debated on Monday 6 December 1982

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asked the Chancellor of the Exchequer what is the relationship between United Kingdom competitiveness and the exchange rate for the £ sterling.

The competitive position of the United Kingdom and its effect on the current account will be one factor among many affecting the exchange rate. Some aspects of competitiveness such as relative export prices and relative unit labour costs, are affected in the short term by movements in the exchange rate, though the experience is that in the longer term gains to competitiveness from a declining exchange rate are offset by the impact on inflation and domestic costs. There are other facets to competitiveness such as design, after sales service and building up a reputation for meeting agreed delivery dates that are not necessarily affected by cost or price movements at all.