Dáil Éireann - Volume 327 - 24 February, 1981

Ceisteanna—Questions. Oral Answers. - Value of IR£.

17. Dr. Browne asked the Minister for Finance the percentage fall in the value of the Irish pound against sterling since the break in parity with sterling.

Mr. Calleary: The figure requested by the Deputy is 22 per cent, which is also the average change in the value of the EMS currencies against sterling over this period, reflecting the strong appreciation of sterling against currencies in the system.

Dr. Browne: Does the Minister agree with me that this, which at one time was alleged to be another wonderful economic breakthrough, has been a disastrous mistake in many ways? Will the Minister say whether, for instance, it has increased the amounts to be paid in repayments of foreign debts to Britain? Presumably there would be a 25 per cent surcharge in relation to Britain and about 20 per cent to 25 per cent in relation to other currencies because of the break of the link with sterling and the consequent devaluation of our currency.

Mr. Calleary: The recent strength of sterling against other currencies generally has been because the UK trade rate index, which measures the performance of sterling against the currencies of its [26] main trading partners, is at its highest level for seven years. I do not honestly think that our decision to enter the EMS has made any appreciable difference. Deputies will appreciate that the main reason for the strength of sterling, in the past two years in particular, has been the advantage accruing to the UK from North Sea oil.

Dr. Browne: May I ask the Minister——

An Ceann Comhairle: Ceist 18.

Dr. Browne:——about the question of borrowing, whether there is any reason why we should not——

An Ceann Comhairle: I have called Ceist 18.

Mr. Harte: Am I not being allowed——

Dr. Browne: The Minister is getting the Ceann Comhairle to help him.

An Ceann Comhairle: That is a disgraceful statement.

Mr. Kelly: It would be impossible to have Deputy Browne named because there are no members of the Government over there.

An Ceann Comhairle: I have called Ceist 18. Will the Minister give the reply to Ceist 18?

18. Dr. Browne asked the Minister for Finance the estimated increase in the cost of living resulting from the fall in the value of the Irish pound since the break in parity with sterling.

Mr. Calleary: It is not possible to estimate the increase in the cost of living, as measured by the consumer price index, resulting from the appreciation of sterling since 30 March 1979, when the one for one parity with sterling ended.

The increase would depend on the extent to which the price of British produced goods and services can be passed on here in the face of competition from [27] Irish goods and services and from other imports.

An Ceann Comhairle: Deputy Kelly.

Mr. Kelly: Unless Deputy Browne wants to ask a question——

An Ceann Comhairle: Deputy Kelly.

Mr. Kelly: Am I to take it — are Deputy Browne and the House to take it — that the Department have not got a clue of the extent to which the separation of the two currencies has contributed to extra inflation here?

Mr. Calleary: The Central Statistics Office do not collect data on unit import values of individual countries' imports, and because we have no data on the movement of the price of imports in the UK it is not possible to discern the effects of changes in the Irish punt ——

Mr. Kelly: Is not the Minister of State in the House at the moment representing a Minister who controls the economic planning element of the Department, and has that element got a clue of the extent to which the extra inflation here has been fuelled by the separation of the currencies? Has the Minister a clue or not?

Mr. Calleary: We have an estimate.

Mr. Kelly: What is the estimate? We will settle for that.

Mr. Calleary: Approximately 3 per cent.

Mr. E. Collins: Is it not a fact that the CSO compile a terms of trade index? If that is so, information regarding the price changes of imports is an essential element in compiling that statistic. Is the Minister telling the House that the CSO have not got that information?

Mr. Calleary: I will repeat for the Deputy that the CSO do not collect data on unit import values of individual countries.

[28] Mr. E. Collins: How do they compile the index?

Mr. Cluskey: Is the Minister telling the House that 3 per cent has been added to the cost of living index by virtue of our membership of the EMS?

Mr. Calleary: That is correct.

Mr. Cluskey: And 4 per cent was added by the budget. Therefore, by two direct actions of the Government the consumer price index is 7 per cent more than it should be?

Mr. Calleary: That is a very easy conclusion for the Deputy to draw.

Mr. Cluskey: It is easy — four and three are seven.

An Ceann Comhairle: Ceist 19.

Mr. Harte: I want to ask the Minister ——

An Ceann Comhairle: Ceist 19.

Mr. Harte: Why are you sheltering the Minister? Why protect the Minister on the EMS, the most embarrassing hot potato this country has had?