Orders of the Day — Economic and Energy Situation

Part of the debate – in the House of Commons at 12:00 am on 19th December 1973.

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Photo of Mr Denis Healey Mr Denis Healey , Leeds East 12:00 am, 19th December 1973

I start with some remarks with which I think the whole House will agree. This is now, as the Chancellor of the Exchequer, the Prime Minister and the Leader of the Opposition have said, the gravest situation that Britain has faced since the Second World War. Our domestic problems, however we define them, are likely to be aggravated very seriously for perhaps many years by a world energy crisis. We all agree on the nature of the energy crisis, although it is difficult to make accurate predictions about its scale. We know that the increase in the price of Arab oil is bound to make inflation worse in Britain and to widen the deficit in our balance of payments.

We do not know by how much or for how long the Arabs will cut the supply of oil below the levels on which we had been counting. We must assume that there will be cuts and that they will last for many months, and probably for many years. All over the world Governments are having to face the fact that the reces-cession in world trade which they were expecting to take place in 1974 may become a slump.

Historians, on looking back to the events of the present year, will see the Arab-Israel war of October as a turning point in the post-war history of the world, in the sense that international affairs, after having been dominated for 25 years by political and military confrontation between the Soviet and Atlantic power groups, are likely for many years to be dominated instead by economic competition among all non-Communist Powers for limited supplies of essential raw materials.

We are conscious now of the competition for oil supplies. We may find before long that there is similar competition for tin, copper, or even food. In the last day or so we have seen two events which dramatically symbolise the revolution in world affairs. A British Government, which only last week promised in all circumstances——