Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 11th July 1960.

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Mr. Amory:

The total, not each item.

It is important also to get in proportion the general effects of these recent measures. Our aim is not to halt expansion but to moderate its rate to a safe pace. If, in the result, our restraints were to prove excessive nothing is easier than to relax them, and in that case we shall stand ready and indeed eager to do so.

The Opposition seem to me to have only one economic idea, namely, to push up demand by every means available to the maximum limit regardless of consequences. I ask them whether they learn nothing from experience? Do they really want us to involve ourselves again in the desperate sequence of shortages of labour, declining exports, lengthening delivery dates and soaring imports, ending in a reserves crisis?

In the end we should suffer a shock to the economy ten times worse than anything that could result from the series of moderate measures which we have been taking in the last few months. The consequence of such a line of policy as that of the Opposition for employment and the standard of living in this country, as well as for the sterling area and the international flow of trade and investment, could be terribly damaging. I can only say that we reject such a policy completely.

In conclusion I want to say that, in general, our economy is at present in good shape. Over the past two years we have achieved a big increase in production, investment, consumption and saving. Employment has continued at a high level. Sterling has been made convertible on current account and is regarded with confidence the world over. Its exchange value continues above par. And we have enjoyed two years of stability in the cost of living.

There are, however, as I have said, two grounds for anxiety. Our current export performance is still not good enough to ensure us as strong a balance of payments as we need, and there is a serious risk that rising money incomes may push up our costs and prices and thus make it still harder to get the exports which we must have.

During the two and a half years that I have been in my present post I have regarded two aims as of paramount importance. The first is safeguarding our balance of payments and the strength of sterling. The second is warding off inflation and preserving price stability and so our power to compete in earning our living. Those two aims are, of course, closely connected, and they are, in my sincere opinion, the two top priorities. Everything else must be subordinated to them.

It is to serve those two ends that the actions for which I have been responsible have been taken. If they are proved wrong, I shall take the blame. I know that I have not succeeded in everything I have tried to do. We must strive all the time to improve our techniques in the light of experience. As I said earlier, we must try all the time to see how fast we can raise our ceilings for production and employment with safety, but I have no shadow of doubt that the principles on which we have been working have been right in our present stage of economic knowledge.

As for those judgments and actions which I have thought it right to take, I must leave them to be judged by results, and I do so with confidence.