LAWSON SAYS LOW U.K. UNIT WAGE COSTS HELP EXPORTS
Chancellor of the Exchequer Nigel Lawson
said current low unit wage costs are helping British exports
but wage rises are "faster than is comfortable."
    He hoped yesterday's Organisation for Economic Cooperation
and Development (OECD) forecasts of increases in wage rises
were wrong, saying OECD predictions "are somewhat unreliable."
    "Productivity is rising very fast, and therefore even though
wages are going up faster than is comfortable, the actual unit
cost of labour...Is not going up fast at all," Lawson said in
answer to questions on BBC radio.
    "That is one of the reasons why we're doing so well in
export markets, for example, but we could do even better and
get unemployment down even faster if there was a more moderate
rate of growth in wage increases," Lawson added.
    His remarks followed yesterday's news that underlying
average earnings were rising 7.75 pct annually in April, up
from March's 7.5 pct increase, which sent the U.K. Government
bond market lower and helped trigger inflation worries.
    Lawson said he would not update his own economic forecasts
for the U.K. Until the traditional Autumn Statement on the
economy.
    Lawson would not be drawn on whether he will cut the basic
rate of tax from the current 27 pct to 25 pct in the next
budget due in March 1988.
    "We will certainly achieve it sooner or later," he said.
    The latest official data, released yesterday, showed unit
wage costs in manufacturing industry were rising 0.9 pct
annually in the three month period ended April, down from a 1.2
pct rise in the first quarter and sharply below last year's
first quarter growth rate of 7.8 pct.
    However, analysts said this figure is likely to deteriorate
somewhat as productivity growth slows later this year.
 REUTER
