Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 29th October 1957.

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Photo of Mr Peter Thorneycroft Mr Peter Thorneycroft , Monmouth 12:00 am, 29th October 1957

I believe that a number of hon. Members wish to take the opportunity of the Adjournment Motion to discuss some of our present economic problems and possible solutions to them, and I think it may be convenient if I start, Mr. Speaker.

On 19th September certain measures were announced on the part of the Government, and have been elaborated since, designed to deal with out internal and external economic problems. In the course of what I shall say, I propose to deal with both—both the drain on our reserves and the problem of rising prices at home. However, I wish to state at the outset what I believe to be the fundamental truth about them, and it is that they are the same problem. The value of the £ at home and the value of the £ abroad is, in the last resort, the same thing, and one cannot tamper with the one without affecting the other.

If we let the process of decline go far enough, we precipitate, of course, a devaluation. It has happened that way before, and unless we support measures to stop it it could happen again. And if it did, everybody's standard of life would go down. Food would cost more, raw material imports would cost more. One cannot contract out of a situation of that kind, even by pressing for higher wage claims, except at the cost of precipitating devaluation to an even lower level yet.

I know, Mr. Speaker, that some people say all this is due to speculation. In a sense perhaps it is, but I think one wants to look a little deeper to see who is speculating and what they are speculating about. If the world thinks that the German mark is strong and that the £ sterling is weak, and might get weaker, then they will buy marks and sell pounds, and that was what was happening in the recent exchange crisis.