I am much obliged. I was searching for a figure, and I am now told that it is approximately 12 per cent. That is one of the reasons why I believe in rather more constraint on money supply, or, at least, a better mix of fiscal and monetary policy; and I say that precisely because I think that it will give us the right sort of financial framework in which these rather large—I had better be careful here, in case I am quoted in my constituency—wage bargains which have been struck recently would not be possible, if—and here I agree with the hon. Member for Worthing—the Government played their part more effectively in the public sector.
Apart from that, there are several other factors which we sometimes overlook when we say that about us all is despair and despondency, deflation, rising unemployment and the rest. There are other sources of inflationary pressure. One is the balance of payments itself. Nobody seems to use the argument that, if we move from a balance of payments deficit to a balance of payments surplus of, say, £500 million or £600 million—I had better stop myself at that figure—the inflationary impact of that is very considerable. There are all sorts of other influences. There is the considerable and continuing inward borrowing from the Eurodollar market. There is the apparently innocuous factor of the use of the funds which are flowing into this country to repay our swaps with the central banks, which have their sterling counterpart.
Finally, there is the effect of any short-term investment that comes into this country, the process so eloquently and poetically described as the unwinding of the leads and lags. All this has sterling implications, and as the country grows in economic strength it will, on balance, present an inflationary situation for the Chancellor.
What about the problem of disclosure by the banks? There will be a separation of deposits from reserves. To what extent will the liquidity position of the banking system increase next February? Technically, it will increase by between a half of one per cent. and one per cent. What will the consequences be?
What about the Bank of England? What will its policy be? I am certain that the Chancellor does not know its policy in relation to money supply. The Governor of the Bank of England keeps on saying that its means of support in the gilt-edged market have not changed, and that its objectives are the same as they ever were. I do not really believe that. If suddenly the investing public turned their back on the gilt-edged market, I wonder what the Governor of the Bank of England would feel he had to do. I think that he would feel he had to support it.
What about the monetary lags? What about that man Friedman, who is now dominating our economic consciousness? What will be the impact, if the Friedman lag is somewhere between six and 18 months, of the upsurge in the supply of money which took place in the fourth quarter of 1968? Nobody knows, but I am very good at posing questions. All I am saying in support of my hon. and learned Friend the Financial Secretary is that I think that on balance the inflationary pressures in the economy are likely to be sufficiently serious for him to retain the import deposits scheme.