Chancellor of the Exchequer (Washington Discussions)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 25th January 1972.

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Photo of Dr John Gilbert Dr John Gilbert , Dudley 12:00 am, 25th January 1972

asked the Chancellor of the Exchequer if he wil make a statement on his talks in Washington last month.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

asked the Chancellor of the Exchequer if he will make a statement on the outcome of negotiations to resolve the economic situation created for the United Kingdom and the rest of the world by the United States' measures of 15th August, 1971.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

My right hon. Friend the Chief Secretary told the House on 20th December of the successful outcome of the Group of Ten Meeting in Washington. I am happy that my fellow Finance Ministers and I were able to reach agreements resolving a potentially damaging situation.—[Vol. 828, c. 1115–20.]

Photo of Dr John Gilbert Dr John Gilbert , Dudley

Will the right hon. Gentleman accept that one of the main purposes of those agreements was to bring back the massive amount of dollars now in Europe, that this objective has not been accomplished, and that a serious element of instability will hang over the whole international monetary system? Does he agree that this is due to interest rate differentials between North America and Western Europe, and will he ensure that European interest rates are brought down, in this country and in the Six?

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

For obvious reasons, I do not propose to comment on interest rates; but it is true that as yet there has been little sign of a reflux of funds. It would not be surprising if some of the comparatively recent speculative inflows were now reversed. If this were to happen, I do not think it need greatly concern this country because we have plenty of reserves.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

Does not the absence of this reflux of funds tend to suggest that, after a period of floating rates, the return to fixed parities, however desirable it may have been, still lacks credibility in the eyes of international traders?

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I do not think that that follows. There is no particular reason why this settlement, which we concluded in Washington, should not last. The next thing is to wait and see the progress of the United States Gold Bill.