Lord Vinson
Main Page: Lord Vinson (Conservative - Life peer)
Lord Popat (Con)
My Lords, there are several reasons why our productivity has been a little weak. The good news is that it has gone up by 0.6% in the first quarter of 2014. Yes, we need more investment to increase our productivity. Compared to the G7 countries, a larger proportion of our productivity comes from our active involvement in the financial services industry. We need to encourage more manufacturing. We have the right tools and policies in place for that to happen. It is happening but it will take time to filter through the system.
Lord Vinson (Con)
My Lords, one of the best ways of raising productivity is to increase demand. Unfortunately, the pound is rising so fast that it has now gone well above its purchasing power parity, making it much harder to export and much easier to import, the very converse of what needs to happen. Will the Government continue to look at every possible way of import substitution and, in particular, look at why a trading nation should not have some concern over its rate of exchange, the rate at which it trades? Could they suggest to the governor that he might begin to raise an eyebrow about the high pound and deleterious effect it is having on trade, productivity and, ultimately, employment?
Lord Popat
My Lords, import substitution is not the answer in this very competitive world. As to depreciation of the currency, experience tells us that our currency is worth 25% less than it was at its peak in 2007. Depreciation is not the answer. We should let our currency fluctuate freely in the open market. Experience tells us that a depreciating pound will not result in higher exports.