BRITAIN'S COMPETITIVENESS

Summary

That this House, concerned at the overvaluation of the pound, particularly against the euro, points out that the inevitable consequences of sustained overvaluation are that manufacturing contracts, so that exports suffer, imports rise, investment falls and production is transferred overseas, all processes more like rigor mortis than stability; accepts that, though the Bank of England always errs on the side of deflation by undershooting its inflation target, it cannot manage the exchange rate, which is the responsibility of the Chancellor, and that for him the strategy of Conservative governments in the overvaluation crises of 1981 and 1991 of 'do nothing and hope for the best' is an abdication when the manufacturing base which generates the majority of Britain's exports is suffering so badly; and therefore calls on the Chancellor to review his options for getting the exchange rate down, for persuading the euro zone to end a competitive devaluation against sterling which stimulates their growth, employment and exports but damages British production, and points out that unless the pound comes down substantially the only alternative defence of the manufacturing base is either by direct subsidy, of the type offered to coal or agriculture, or massive cuts in all burdens on producers including tax, NIC, utility and government charges, because doing nothing will lead to more damage to the productive economy, to the manufacturing regions, to employment, exports, economic growth and investment in this country, resulting in a lopsided, uncompetitive economy unable to pay Britain's way in the world.

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Timeline

1. 16 May 2000

   Early Day Motion

   That this House, concerned at the overvaluation of the pound, particularly against the euro, points out that the inevitable consequences of sustained overvaluation are that manufacturing contracts, so that exports suffer, imports rise, investment falls and production is transferred overseas, all processes more like rigor mortis than stability; accepts that, though the Bank of England always errs on the side of deflation by undershooting its inflation target, it cannot manage the exchange rate, which is the responsibility of the Chancellor, and that for him the strategy of Conservative governments in the overvaluation crises of 1981 and 1991 of 'do nothing and hope for the best' is an abdication when the manufacturing base which generates the majority of Britain's exports is suffering so badly; and therefore calls on the Chancellor to review his options for getting the exchange rate down, for persuading the euro zone to end a competitive devaluation against sterling which stimulates their growth, employment and exports but damages British production, and points out that unless the pound comes down substantially the only alternative defence of the manufacturing base is either by direct subsidy, of the type offered to coal or agriculture, or massive cuts in all burdens on producers including tax, NIC, utility and government charges, because doing nothing will lead to more damage to the productive economy, to the manufacturing regions, to employment, exports, economic growth and investment in this country, resulting in a lopsided, uncompetitive economy unable to pay Britain's way in the world.

   Source: Early Day Motion

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Sponsors

• Austin Mitchell · Labour · Primary sponsor

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