As my right hon. Friend the Chancellor of the Exchequer was opening his Budget, and drawing attention to the grave international background against which our discussions are being conducted, in the United States of America the American President was acknowledging for the first time that the United States is already in recession. When we consider my right hon. Friend's measures and analyse and appraise them, we should bear in mind the world as well as the domestic situation in which my right hon. Friend is operating.
Storm clouds of slump are gathering all over the advanced industrial nations of the world. The oil price crisis has aggravated world inflation, which again threatens us with economic and political dislocation. Britain herself faces as astronomical balance of payments deficit, not made any easier because it is accompanied by similarly astronomical deficits faced by her neighbours.
We can survive the period ahead only if we maintain our credit abroad strong enough to borrow the billions of pounds required to fuel our industries and to feed our people while we gird up our loins to get back into some more reasonable balance. I do not want to dwell again on the immense difficulties involved in the oil price explosion which has occurred this year. All I can say is that there is no hope of its solution and no hope in any of the measures we decide upon in the House if a world slump of massive proportions falls upon us.
Such a slump can be avoided only if the level of international co-operation is swiftly and massively improved. If this country is to play the notable part that she has played so far in such international co-operation, we must run our own affairs in ways which do not discredit us abroad. We must have influence in the councils of the world.
Here I can sincerely take pride in the efforts of my right hon. Friends the Prime Minister, the Foreign and Commonwealth Secretary and the Chancellor in plugging away against much folly and doctrinaire blindness which exist in the world and which have been unable to cope with the new, baffling problems which have been suddenly injected into the world situation. We are being perilously slow, in the advanced countries of the world in aggregate, in meeting these new problems. If those in whose hands the financial decisions of the world are placed show the same level of intelligence, zeal and swiftness of response in the next 12 months as they have shown in the past 12 months, we shall all be ruined. That is a safe bet.
Everything that we are playing for depends upon international co-operation. I am ready to contrast what the present Government have done with what was done by their predecessors. Most unfortunately, when the oil crisis first broke out the then Prime Minister, now Leader of the Opposition, seemed to take a sort of Gaullist lurch, which was in grave danger of wrecking our relations with the United States.
As a passionate European, who sometimes has some difficulty in expressing that passion from this Dispatch Box, I have always seen a strengthening of our European co-operation not as something to cause abrasiveness between us, Europe and the United States but as a means of achieving that better balance in the relationship which will lead to a more effective and truer partnership between Europe and the United States.
In the present fragile world situation, which causes me more anxiety than any world economic situation in the whole of my adult life, and which is certainly the gravest the world has seen since the war, what are the problems facing the Government in running the domestic economy so that their people perform as well as possible and their industry both public industry and the private enterprise sector is energised as much as possible? I shall not deal now with the public enterprise sector, which has been dealt with on other occasions. For the purpose of this discussion I want to concentrate, as the Budget inevitably does in its financial strategy, on the private enterprise sector.
We have three major problems in the private enterprise sector. The first is that price controls—introduced, let it be remembered, by the Conservative Party—have gradually worked with an increasing severity, not because that was intended by the Price Code but because inflation had the effect of turning the price controls into an ever-tightening noose. It is clear that unless we are to have industry performing well below its capacity, that situation must be remedied. I shall not go into details about this, because my right hon. Friend the Secretary of State for Prices and Consumer Protection explained the need and the relaxation yesterday.
The second problem is the way in which we tax profits, and the third is the atrophy of the financial institutions for providing industry with fixed-term finance for capital investment.
All these three problems are crucial to the success of our economy. If they are not dealt with, the private enterprise sector, which provides most of our exports and most of our employment, will be in a state of collapse within the not-too-distant future. It is right that we should direct our attention urgently to dealing with these three problems.
Our people have a great deal at stake here. Unemployment would rise to astronomical heights if we were to continue in the present way. Any startling decline in our own industry would produce immediate repercussions on our credit abroad, which would in turn worsen the calamity which would befall us.
I repeat that we have a great deal at stake: our employment level and the investment level of our industry, on which our future competitiveness and standard of life depend. Incidentally, with regard to investment, it is no asset to the people of this country that we are now dealing with a Stock Exchange whose level inhibits any prospect of a buoyant investment picture. Until is it remedied——