Economy: Overseas Trade Deficit

Debate between Viscount Hanworth and Lord O'Neill of Gatley

Wednesday 25th May 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, I like to think that my talents are spreading as the years go by but I am not yet capable of reading a French newspaper and so have not read that particular story.

[Viscount Hanworth (Lab)]

My Lords, it is clear that the only way in which to mend the balance of payments is to increase substantially our exports of manufactured goods. For our goods to become saleable abroad, the value of the pound must be reduced. If nothing is done to overcome the balance of payments problem, it is inevitable that the pound will eventually plummet. Can the Minister envisage a more orderly way of reducing the value of the pound?

[Lord O'Neill of Gatley]

My Lords, it is time for repetition again: our trade balance is smaller than it has been at any time in the past 10 years. It has been stable at around 2% of GDP. The deterioration of the current account, which has been significant in the past two years, is due to a growing imbalance in the so-called investment account.

Economy: Balance of Payments and Industrial Productivity

Debate between Viscount Hanworth and Lord O'Neill of Gatley

Thursday 10th December 2015 Lords Chamber

[Lord O’Neill of Gatley]

My Lords, luckily the decision on what happens to interest rates has absolutely nothing to do with me and is the responsibility of the independent Bank of England.

[Viscount Hanworth (Lab)]

My Lords, one of the factors that inhibits our exports is our overvalued rate of exchange. Should the Government not consider establishing a sovereign wealth fund to purchase foreign assets whenever the sterling rate of exchange exceeds a certain threshold value? This, after all, would compensate for our selling our family silver abroad.

[Lord O’Neill of Gatley]

My Lords, by and large as a result of the Bank of England’s responsibility for monetary policy, in effect the responsibility for what happens to the exchange rate in a very competitive world is hugely influenced by our monetary policy relative to others. We have been and remain in favour of open markets, where prices are determined in world markets.