Capital Investment (EEC Countries)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 22nd February 1973.

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Photo of Mr Roger Moate Mr Roger Moate , Faversham 12:00 am, 22nd February 1973

asked the Chancellor of the Exchequer what exchange control restrictions now limit the free movement of capital from the United Kingdom into EEC countries.

Photo of Mr John Nott Mr John Nott , St Ives

The normal rules apply, with two significant differences. First, United Kingdom companies may transfer up to £1 million per project per year through the official exchange market to finance direct investment in EEC countries. Secondly, people moving to work in the EEC may transfer sufficient funds in official exchange to ensure their freedom to take up their employment.

Photo of Mr Roger Moate Mr Roger Moate , Faversham

Are not certain Community countries now operating even tougher restrictions on investment movement? Is it not also the case that we are committed, by the end of next year, to removing all remaining restrictions on the financing of direct investment? Can my hon. Friend say whether, if this programme in the transitional arrangements is to be adhered to, it will be done only on a reciprocal basis?

Photo of Mr John Nott Mr John Nott , St Ives

I am not aware of the particular examples that my hon. Friend is giving, but concerning the full liberalisation of direct investment, under the timetable this is something which we have to meet by 1st January 1975.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

In the event of a balance of payments crisis, would action to reimpose controls on capital movement in the Common Market be compatible with our Common Market obligations?

Photo of Mr John Nott Mr John Nott , St Ives

There is very little purpose in my answering a hypothetical question of that nature.

Photo of Dr John Gilbert Dr John Gilbert , Dudley

Is it not a fact that the official limit of £1 million per project per year is widely known in the City to be virtually a dead letter now? Will the hon. Gentleman confirm that the net flow of capital, on both the direct account and portfolio account, is overwhelmingly from this country into the EEC, and not the other way around?

Photo of Mr John Nott Mr John Nott , St Ives

In the latter part of his question I think that the hon. Gentleman was suggesting that the flow was mainly coming into this country rather than vice versa.

Photo of Mr John Nott Mr John Nott , St Ives

At present all the indications are that there is a substantial flow of money going into direct investment in the EEC. We should certainly welcome that.