Balance of Payments

Part of the debate – in the House of Commons at 12:00 am on 22nd January 1974.

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Photo of Mr Denis Healey Mr Denis Healey , Leeds East 12:00 am, 22nd January 1974

Yes, but is the Chancellor of the Exchequer not aware that the trade figures which were published yesterday affect a situation which developed before the oil crisis had time to feed through into the balance of payments, and which existed long before the industrial disputes began in the middle of December? Does he not agree that the situation revealed by those figures is extremely grave for the British economy? Does he not agree with the Governor of the Bank of England that they show that before the oil crisis our balance of payments deficit was running, in relation to our national wealth, more than three times as high as it was running under his predecessor in 1964?

Will the Chancellor tell the House what he proposes to do about the situation in two respects? First, does he not now agree with all informed commentators that excessive domestic demand must be a major factor in the extraordinary fact revealed by the figures that, in a year when our exporters had extreme price advantages through the devaluation of the pound, the volume of our exports increased less than the volume of our imports? Second, will the Chancellor say when he proposes to introduce the extremely harsh measures to reduce demand which were promised by the Minister for Energy on Friday? Will he assure the House that such measures will be accompanied by essential measures for increasing social justice in this country?

As for the external aspects of our balance of payments problem, does the Chancellor not agree that the decision of the French Government to float the franc at a time when that country has substantial reserves, after a year in which it had a £600 million surplus on its balance of payments, suggests that it is adopting a "beggar my neighbour" policy and that the world may be embarked on a course of competitive devaluation? Is it not the case that the Spaniards devalued the peseta this afternoon? What action does the right hon. Gentleman propose to initiative inside the IMF to reach agreement on this matter?

On the question of financing our deficit, will the Chancellor tell us whether he proposes to increase the amount of public authority borrowing from the Eurocurrency markets at rates of interest amounting to about 10 per cent., which impose an arduous and exceptional additional burden on our balance of payments, or has he approached the IMF or friendly Governments for a loan? Does he believe that the Government's decision to go it alone in the oil crisis is likely to make other Governments more ready to help us in this regard?

Is he aware that no one on the Opposition side of the House is now surprised to learn that he should seek to distract attention from the ruin of his economic policies by provoking industrial unrest or that he should seek to slip out of his responsibilities for managing the economy of this country under cover of a General Election.