To ask the Chancellor of the Duchy of Lancaster what representations he has received about exchange rate stability from manufacturing industry during the past 12 months.
My Department has received representations from a number of companies and trade organisations on the subject of exchange rates.
Does my right hon. and learned Friend agree that manufacturing industry greatly prefers stable to floating exchange rates and would like Britain to join the exchange rate mechanism of the European monetary system? Is he pressing that view on his colleagues in the Government?
We all wish to see a certain stability in exchange rates, because that is to the advantage of all international trade. However, given the present state of the international exchange markets, it is not possible to achieve complete stability. I have always found the EMS and the idea of joining it attractive. As my hon. Friend knows, the Government will decide whether to join it when the time is right.
Is the Chancellor of the Duchy of Lancaster aware that not many days ago, just before the Easter recess, we had a meeting here with the representatives of the hosiery and knitwear trade and the unions working in it? The right hon. and learned Gentleman, of course, was not present at the meeting, so I am telling him about it now. During those discussions the representatives mentioned not only the unfairness of competition but the financial instability in the exchange rate. When will the Government do something about the problem? Industry is crying out for stability to help it on its way to success. Will the Minister get off his backside and do something about it?
I am sorry that my duties as a Minister sometimes prevent me from pursuing my interests as a constituency Member and attending meetings with representatives of the hosiery and knitwear trade. I am delighted that the hon. Gentleman was there looking after the interests of my county and of those who work in the industry.Of course, we all desire reasonable stability in exchange rates. However, hon. Members must consider the state of the world exchange markets. No currency can be guaranteed stable exchange rates. Exchange rates have, in fact, been rather advantageous for the bulk of British industry over the past 18 months or two years, but some movements are inevitable, given the present state of international markets.
Does my right hon. Friend agree that, while it is obvious that industry prefers stable exchange rates, another perhaps even more important factor is the control of inflation? When the CBI next complains about the exchange rate going up in Britain, will he perhaps remind it that in Japan the yen has appreciated by 40 per cent., and that that country is still able to beat us in many of our export markets?
I agree with my hon. Friend. Germany and Japan do not seem to have suffered noticeably from having strong currencies over the past few years. My hon. Friend is also right that, when the level of interests rates is being set, a number of factors must be taken into account. One is the effect of changes on the exchange rate; another is the effect on internal demand, monetary policy and the inflation rate.