Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 1 March 1966.

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Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee 12:00, 1 March 1966

No. We have plenty of time to debate these matters, and I am in doubt whether the hon. Member seeks to deal with a matter of fact or a question of opinion.

On the alternative measure, the balance of monetary movements, the reduction was even more. In round terms the improvement amounted to about £400 million—over 1 billion dollars—that is well over 1 per cent. of the national income.

At a time when the Government are asking for greater effort from the nation, it is worth while to stand back for a moment to observe how much real progress has already been made. The trade deficit was cut in half between 1964 and 1965. With the help of the temporary import charge and the measures we took to moderate the growth of demand, the growth of imports was markedly checked. Whereas the value of imports as measured by the trade accounts had risen by 14 per cent. in 1964, in 1965 the rise was 1 per cent. Finished manufactures, which are mostly subject to the charge, showed a big difference between the movement of imports of capital goods, which rose by 14 per cent. and the movement of imports of consumer goods, which fell by 11 per cent. This reflects the strength both of fixed investment at home and the effect of the Government's measures to restrain the growth of consumption, about which I shall have something to say later. It was a movement away from what the Prime Minister always calls the candy floss economy.

On the other side, exports—already benefiting from the many measures we have taken to promote overseas sales—went ahead well. They rose by 7 per cent. in value and 5 per cent. in volume, rates of increase substantially above the average for the last few years. There was a most significant increase in sales to North America, which rose by 18 per cent. Exports of aircraft and aero-engines rose encouragingly, and so did orders for ships—aircraft that we can sell, not those that we have to give away—