Sterling: Exchange Rate

Lord Lea of Crondall Excerpts

Tuesday 25th June 2013 Lords Chamber

[Lord Newby]

My Lords, it is a tool of limited use but that does not mean it is of no use at all. Obviously, you cannot have over a prolonged period all countries devaluing or competitive devaluation becomes a race to the bottom. The Governor of the Bank of England and the MPC would argue and have argued that without that devaluation our trade position would have been worse than it has been.

[Lord Lea of Crondall]

My Lords, is not the truth that the price devaluation of sterling can hardly be zero and that saying that price does not matter in export markets would make a nonsense of the whole argument about competitiveness? Would it not be more true to say—here I echo my noble friend Lord Peston—that when it comes to our manufacturing in particular exports, where the ratio of visible trade is 2:5 against us, we must have a policy on both sides? We must be competitive in price, which might require the pound to go down further, on that argument, but we must also give a massive shift of economic priority towards manufacturing as against the financial services industry.

[Lord Newby]

My Lords, the Government have been clear from the start that we want a shift away from financial services towards manufacturing. To a certain extent, that is happening. For example, we had an export surplus in cars last year for the first time in nearly 40 years.