Does my right hon. Friend agree that international trade was facilitated and that the British economy worked much better when there were fixed exchange rates? What steps are the Governnent taking to encourage greater order in international exchange rates? To that end, when will Britain join the exchange rate mechanism of the EMS?
As my hon. Friend knows, the exchange rate mechanism of the EMS is not a system of fixed exchange rates. There have been fluctuations in the exchange rates between European currencies and the dollar. Of course all of us, especially exporters, would like a more stable exchange rate, but it is impossible to imagine that there could be a system of fixed exchange rates without enormous pressures on currencies when the rates become substantially out of line with true market values.
Is it not important to do everything that we can to limit those movements? Is it not unrealistic to expect an expansion of trade in manufactured goods across international frontiers if we cannot tell from one month to the next what revenue we shall receive for given export orders because of fluctuations in exchange rates?
I understand and share my hon. Friend's concern about the problems faced by exporters, but it is not just this country which finds itself in that position. Every other country has the same system of floating exchange rates. We must try to obtain greater market stability by encouraging sound monetary and fiscal policies, not only in this country but in many others. That was one of the aims of the recent international summit.
Does the Minister accept that there is no such thing as a clean float and that one of the dirtiest elements is the current level of interest rates, which in the last six months has helped to push up the pound against the yen by over 6 per cent, and against the deutschmark by nearly 5 per cent.? Does the Minister think that loss of competitiveness of that kind is helping British business men who are trying to sell in international markets?
It is impossible to please the whole House on this issue. Whatever the rate of the pound may be, the Opposition will criticise it. The real point is that it is impossible to move against market pressures on any one currency if those pressures are sufficiently strong. It is an illusion to imagine that fixed exchange rates can work in a situation of that kind. We saw what happened when the Labour Government tried to operate such a policy.