Sterling: Exchange Rate

Debate between Lord Newby and Lord Blackwell

Tuesday 25th June 2013 Lords Chamber

[Lord Newby]

I do not agree with the noble Lord. The April trade figures show a deficit in goods and services of £2.6 billion, compared with a figure of £4.6 billion 12 months ago.

[Lord Blackwell]

My Lords, does my noble friend accept that, according to macroeconomic theory, one of the drivers of a trade deficit is a government deficit, because any public borrowing tends to be offset by savings from overseas savers? Would not those noble Lords who are concerned about the trade deficit, rather than trying to manipulate the exchange rate, be better off supporting the Government’s efforts to reduce the government borrowing level?

[Lord Newby]

My Lords, that is a very sensible point. I think that everybody is agreed that we need to do everything we can, as UKTI is, to promote exports, because growing exports means growing jobs, greater growth and a smaller deficit.