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Defence Budget (Exchange Rates)

Volume 109: debated on Saturday 2 May 1987

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asked the Secretary of State for Defence if he will state the sterling/deutschmark exchange rate on which his budget for British Army of the Rhine was prepared; if he plans to make any further provision for changes in the exchange rate; and if he will make a statement.

The 1986–87 defence estimates were prepared in accordance with established practice on the basis of an end June 1985 spot rate of 3·90 deutschmarks to the pound. Changes in the rates of exchange are one of a number of factors taken into account during the financial year for monitoring and controlling defence expenditure within the cash limit.

asked the Secretary of State for Defence if he will state the effect in sterling terms on the defence budget of a one pfennig change in the sterling/deutschmark exchange rate.

The effect of a one pfennig change in the exchange rate in 1986–87 on the defence budget, excluding local drawings of salaries and allowances which are not sensitive to the full effect of exchange rate movements, is some £2 million to £2·5 million.