Sterling: Exchange Rate

Lord Empey Excerpts

Tuesday 25th June 2013 Lords Chamber

Asked By

[Lord Empey]

To ask Her Majesty’s Government what steps they are taking to bring about a lower exchange rate for sterling.

[Lord Newby]

My Lords, the UK does not have an exchange rate target. The Government’s macroeconomic framework includes an independent Monetary Policy Committee responsible for monetary policy that seeks to deliver price stability through an inflation target of 2% as measured by the 12-month increase in the consumer prices index. Under this framework the exchange rate is allowed to adjust flexibly.

[Lord Empey]

It is a great source of disappointment to me, and I am sure to many in your Lordships’ House, that the export-led recovery which we had all hoped for has not yet occurred. Does the Minister agree that while we take no action with our exchange rates and play by the Queensbury rules, our principal trading competitors in China and Japan are not so constrained as they deliberately manipulate the value of their currencies to the grave disadvantage of our exporters? Will he join with US President Obama, who in the past few weeks has expressed similar concerns?

[Lord Newby]

The UK exchange rate has fallen by about 20% since 2007. It was hoped that that would give a big stimulus to exports; it has given some, but not as much as we would have liked. On China, our trade to China over the past three years has increased by 76%. In April, for the first time, trade in goods to China reached £1 billion in a month. The access to China is proving rather better than the access to some other countries.