Sterling: Exchange Rate

Lord Davies of Stamford Excerpts

Tuesday 25th June 2013 Lords Chamber

[Lord Newby]

My Lords, the Government have no policy in terms of the exchange rate. Equally, the MPC does not target the exchange rate. However, the Governor of the Bank of England, before he retired in recent months, said on a number of occasions that he thought that the level of sterling is, in his view, now about right.

[Lord Davies of Stamford]

Is it not the case that under the brilliant economic management of this Government we have got the worst of all possible worlds? We have had a devaluation and the classic cost of that—an inflation rate which is about twice the eurozone average—but we have had none of the advantages: the balance of payments has got worse; the deficit has increased not fallen; growth has been imperceptible; we have the third lowest rate of capital investment in the EU; and under the most recent growth and employment figures, it appears that productivity is either static or declining.

[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.